UPA launches austerity drive, bans 5-star hotel meetings and executive class air travel

ChidambaramFinance Minister P Chidambaram met Financial Advisors of various ministries to impress upon them the need for austerity.

Government on Wednesday unveiled austerity measures putting a freeze on fresh appointments, banning holding of its conferences in 5-star hotels and barring officials from executive class air travel in a bid to check fiscal deficit from going out of control.

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Battling slow economic growth and not too robust tax collections yet, the government came out with a slew of measures that would ensure that ministries and departments would not buy new vehicles, create new jobs or fill posts lying vacant for over one year.

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The Finance Ministry on Wednesday issued a circular containing the steps, which will cut non-plan expenditure by 10 per cent, a day after Finance Minister P Chidambaram met Financial Advisors of various ministries to impress upon them the need for austerity and to contain expenditure within the budget target.

The measures aim at restricting the fiscal deficit to the budgeted figure of 4.8 per cent of GDP in 2013-14.

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The Finance Ministry has also directed that the size of delegations going abroad should be kept at "absolute minimum."

The government has been employing austerity measures since 2008-09, most recently in November 2012.

"Such measures are intended at promoting fiscal discipline, without restricting the operational efficiency of the government. In the context of the current fiscal situation, there is a need to continue to rationalise expenditure and optimise available resources," the Ministry said in the circular.

Chidambaram had earlier said that he had drawn a red line and would not allow the fiscal deficit to breach the target of 4.8 per cent of GDP in 2013-14.

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