Government launches austerity drive; bans meetings in 5-star hotels

Government departments have been banned from holding meetings in 5-star hotels and officials barred from executive class air travel as part of a slew of austerity measures announced today to cut non-plan expenditure by 10%.

Aiming to restrict the fiscal deficit to 4.8 per cent of GDP in 2013-14, the Finance Ministry has ordered all ministries and departments not to buy new vehicles, create new jobs or fill posts lying vacant for over one year. It has also directed that the size of delegations going abroad should be kept at "absolute minimum." The government has been introducing 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 Finance Ministry said. Finance Minister P Chidambaram earlier said he had drawn a red line and would not allow the fiscal deficit to breach the target of 4.8% of GDP in 2013-14.

The various austerity measures helped the government to contain the fiscal deficit at 4.9% of GDP in the previous financial year, against the budgeted target of 5.1%. The circular came a day after Chidambaram met Financial Advisors of various ministries to impress upon them the need for austerity.