Union Budget: Desperate on deficit, govt to set to slash defence and welfare spending

Union Budget

"Ideally the government should have cut non-planned expenditure such as subsidies," he said. "It also fails to address the supply bottlenecks leading to inflationary pressures."

The finance minister was backed by Prime Minister Manmohan Singh and influential adviser Montek Singh Ahluwalia in a series of meetings with government officials, two officials privy to the agenda of the meetings said. Congress party leaders have publicly given backing to fiscal consolidation in recent days.

Harvard-educated Chidambaram has promised to provide enough funds for the government's flagship programmes -- food security, rural jobs, village roads, health and education in the budget -- once he succeeds in improving the government deficit this year.

India earmarked $97 billion for spending on such projects out of the $278 billion budget for the current fiscal year.

The finance ministry has also imposed a ban on hiring in ministries, meetings at luxury hotels, the purchase of new vehicles and places some restrictions on foreign tours. ($1 = 53.3950 Indian rupees)

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