Austerity measures on the anvil in India to cut down budget deficit

New Delhi, May 18 (PTI) The Indian government may slash spending on foreign travel by ministers and officials and on meetings in five-star hotels as part of austerity measures to cut down on budget deficit in view of the tight economic situation. Also on the cards is pruning of allocations made to various schemes, where spending will be insisted on current outlay before asking for additional money. "The austerity drive would be divided into two parts. First there would be a cut in establishment expenses, and then there could be some cut in the scheme wise expenses as well," official sources said. With finances under stress, Finance Minister Pranab Mukherjee had announced on Wednesday in Parliament that government would resort to "unpopular" austerity measures to deal with fiscal problems. "I am going to take a little bit of unpopular steps. I am going to issue some austerity measures," Mukherjee had said. It is likely that the government would announce some curbs in foreign tours by ministers and officials as well as insistence on travel by economy class. "A detailed plan has to be worked out for expenditure rationalisation," the official said, adding that a decision on the scheme wise expenditure would be taken after consultation with various ministries. In a bid to reduce wasteful expenditure and containing fiscal deficit, the government had last year cut foreign tours and asked officials to refrain from hosting conferences in five-star hotels. Besides, in 2009 in the wake of global economic slowdown the finance ministry had asked various ministries and departments to cut non-plan expenditure by 10 per cent. At that time too ministers were made to travel economy class in domestic and international flights. Anticipated fiscal deficit exceeding budget estimates by a huge margin, rising subsidy burden and slowing growth has made the government take steps to rationalise expenditures to control its finances. Fiscal deficit had ballooned to 5.9 per cent in FY 2011-12 ended March 31, 2012 and the government has budgeted to bring it down to 5.1 per cent in the current fiscal. Last fiscal, it had provided rupees 650.0 billion in fuel subsidy, which it hopes to trim to Rs 400.0 billion in 2012-13. PTI