India bans 5-star hotels in austerity drive

India ordered an immediate austerity drive on Thursday banning government meetings in five-star hotels, curbing foreign travel and halting the creation of new posts to help rein in a bulging deficit.

There will also be a ban on buying new vehicles, the finance ministry said

in an official directive to all ministries, issued hours after figures showing that India had posted its worst economic growth performance in nine years.

A range of measures on "fiscal prudence and economy" have come into force with immediate effect, the ministry said, but analysts cautioned that far more effort was needed to put India's finances on a sound footing.

Economic growth slowed to 6.5 percent in the 2011-12 financial year, according to the data, which pushed India's currency to a new lifetime low of 56.50 rupees to the dollar. "There is tremendous pressure on government's resources, there is an urgent need for rationalisation of expenditure and optimisation of available resources with a view to improve macroeconomic environment," the ministry said.

AFP