Austerity drive to cut wasteful expenditure: Pranab

Justifying the government's austerity drive, Finance Minister Pranab Mukherjee today said the restrictions on foreign visits and other expenses are aimed at curbing wasteful expenditure and containing fiscal deficit.

"I sent a note (on austerity in government departments) and Prime Minister has approved in certain areas where I considered that wasteful expenditure should be avoided and that money should be deployed for developmental work," he told a press conference.

Amidst increasing subsidy on food, fertiliser and fuel, the government yesterday asked ministries and departments to restrict foreign travel and refrain from holding meetings in five-star hotels with a view to reducing public expenditure.

The government has also advised the ministries not to buy new vehicles or create posts.

Mukherjee said while there is no concern on the revenue collection front, the subsidy bill of the government on crude oil may go up if prices continue to remain high.

Besides, the government may also have to shell out more to meet the subsidies on food and fertiliser.

"(So) I shall have to keep the target of the fiscal deficit... But surely I am interested to have some austerity measures to avoid the wasteful expenditures, but not productive expenditure," he said.

The government proposes to keep the fiscal deficit at 4.6% of the Gross Domestic Product (GDP) in 2011-12, down from 4.7% in the previous fiscal.