India Announces Austerity Measures to Contain Fiscal Deficit

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India’s finance ministry on Wednesday announced a ban on five-star venues for government meetings; foreign locations for conferences, exhibitions and seminars; and executive class airline tickets for officials.

A finance ministry circular on Wednesday pressed officials to keep the size of delegations going abroad at an “absolute minimum.” It also banned recruitment for central government posts for one year and the purchase of new vehicles.

The austerity measures are aimed at helping India’s flailing economy, which has been struggling to gain ground over the past few months.

“Such measures are intended at promoting fiscal discipline, without restricting the operational efficiency of the government,” a finance ministry statement said of the small-bore restrictions.

The ministry is hoping the measures — which include a 10% cut in non-plan expenditures, but exclude interest payments, repayment of debt, the defense budget, salaries, and pensions — will help to restrict the fiscal deficit to 4.8% of the GDP in 2013-14.

India’s finance ministry announced similar austerity measures in November last year, which helped it contain the fiscal deficit at 4.9% of GDP.

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