New Delhi: Amid signals indicative of tough days ahead, Finance Minister Pranab Mukherjee on Friday announced new austerity measures aimed at reducing government expenditure.
The Finance Minister, who is faced with the spectre of slowing economy and rising inflation, has put a blanket ban on buying new vehicles by the government, besides imposing curbs on holding workshops/meetings by government officials at five-star hotels.
Foreign trips by government officials will also be restricted, as part of the new initiative.
The clampdown on general government expenditure comes amid weakening of rupee and a choppy share market. What is adding to the economy’s trouble is the apparent failure of the government in controlling fiscal deficit.
Yesterday, Pranab had said that he would impose new austerity measures, howsoever unpopular they may be, to address India`s fiscal problems and spur growth.
He said that the government’s focus would be on improving sentiment but stressed there was no need to press the "panic button".
However, sound economics would infer that tightening of purse strings is a necessary precaution at this juncture and Pranab appears to have done just that.
The UPA government had gone on an austerity drive in 2009 as well – government had put a cap on overseas travel by MPs and ministers, besides asking officials to fly economy class.
But within six months into the austerity drive – March 2010 – the government appeared willing to loosen purse strings once again.
It remains to be seen how long will this round of ‘spend less’ resolve will last.