Government withdraws austerity restrictions on employee travel

With the finance ministry withdrawing last year's controversial austerity measure, government employees can now travel premium class on both international as well as domestic flights.

In its order last September, the government had directed its employees not to fly first class on government account, irrespective of their entitlement, but instead fly economy for all domestic travel, a move that had evoked sharp protest from senior officials and cabinet ministers.

Under the issued directives ministers and bureaucrats were required to fly Air India, the official carrier and were forbidden from holding press conferences, seminars and other events at five-star hotels.

''It has been decided that with effect from April 1, 2010, travel on government account by air, both domestic and international, may take place by the entitled class,'' said an official memorandum issued by the ministry.

The government, however, has clarified that the austerity directive in case of leave travel concession (LTC) would continue. "Austerity measures will remain in place for travel by air (where admissible) on LTC, which would continue to be restricted to economy class irrespective of the entitlement,'' the directive said.

The fresh directive comes after an assurance by finance minister Pranab Mukherjee to his cabinet colleagues at a recent cabinet meeting. The austerity measures were introduced to cut cost during the economic slowdown and a failed monsoon. Meanwhile, the government's fiscal deficit, the gap between receipts and spending that is usually financed through borrowings, has been pegged at 6.7 per cent of the gross domestic product (GDP) in 2009-10.

The government is expecting fiscal deficit to come down to 5.5 per cent of the GDP with the withdrawal of stimulus measures such as excise duty cuts, and higher collection by way of revenues as the economy picks up. The economy grew at a subdued rate of 6.7 per cent in 2008-09 but as per projections is likely to grow at 7.2 per cent in 2009-10 and by 8.5 per cent in 2010-11.