PM Modi boots officials out of the first class cabin

Friday, 31 October 2014 01:02 - - {{hitsCtrl.values.hits}}

Reuters: Prime Minister Narendra Modi has ordered bureaucrats to forgo the luxury of flying first class and start paying for their spouses’ air tickets as he tries to deliver on a promise to cut the fiscal deficit to a seven-year low. The ban on first-class travel, which could save $3,000 on a long-haul flight, is part of an austerity drive launched by Modi on Thursday to cut discretionary spending by 10% in the fiscal year to March 2015. The Finance Ministry has also barred meetings at five-star hotels, the purchase of cars for Government officials and the creation of new posts in central departments. While Thursday’s small-bore measures copy a playbook New Delhi has relied on since 2012 to trim a bloated deficit, they fit in with the frugal image that Modi, 64, has cultivated since becoming Prime Minister five months ago. “There is a need to continue to rationalise expenditure and optimise available resources,” the Finance Ministry said in its directive. However, interest and debt payments, the defence budget, salaries and pensions will not be affected. “Such measures are intended at promoting fiscal discipline, without restricting the operational efficiency of the Government,” the Finance Ministry said. India’s longest economic slump since the 1980s has slashed tax receipts, forcing New Delhi scale back public spending by nearly $33 billion in the past two years to deliver on its deficit goal and retain its investment-grade credit rating. In its maiden budget in July, Modi’s Government pledged to narrow the fiscal deficit to a seven-year low of 4.1% of Gross Domestic Product in the fiscal year to next March. A slide of 25% in global oil prices since June has made Government officials more confident of meeting a tough target without deeper spending cuts.