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India Plans Cost-Saving Steps After Measures on Oil
June, 06th 2008

India's government proposes to save as much as 60 billion rupees ($1.4 billion) by cutting spending on administrative expenses and foreign travel by ministers and top bureaucrats as part of a cost-saving exercise.

All ministries have been advised to cut spending by 5 percent to 10 percent, Sushma Nath, expenditure secretary in the ministry of finance, told reporters in New Delhi today. The government will meet the year's budget deficit target, she said.

India's Prime Minister Manmohan Singh earlier today asked ministers and top bureaucrats to cut spending as rising oil prices have put an additional burden on public resources. Singh's government yesterday raised retail fuel prices, cut taxes on fuel and said it will absorb a major portion of the increase in international oil rates.

``I am writing to ask you to severely curtail expenditure on air travel, particularly foreign travel, except in cases where it is deemed to be absolutely necessary,'' Singh wrote in a letter to his ministers.

The government plans to put in place stricter rules on foreign travel proposals of ministers and bureaucrats, the Prime Minister had said in the letter.

The finance ministry has proposed a 10 percent cut in advertising and publicity expenses on ministries, Nath said. There will be no reduction in interest payments, salaries and pensions, she said. The government has also asked its departments to stop holding meetings and conferences at five-star hotels as part of the austerity measures.

Finance Minister Palaniappan Chidambaram seeks to narrow the budget deficit to 2.5 percent of gross domestic product in the year to March 31 from 3.1 percent in the previous year.

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