Asia
2:37 am
Mon June 11, 2012

In India, A Different Kind Of Austerity

Originally published on Tue June 12, 2012 5:44 pm

In Europe, the concept of austerity has meant deep, painful cuts to government spending. In India, however, austerity looks a little different.

India's government has started by reeling in departmental spending on things like hotel space and foreign travel. It may seem like window dressing, but it can be difficult to make deep spending cuts in that country. Many voters see government largesse as a right and usually applaud pork-barrel spending.

Mihir Sharma, a columnist at the Business Standard newspaper, says the government is trying to combat poverty, malnutrition and other critical needs.

"A snotty-nosed 27-year-old analyst on Wall Street might be concerned that the government has not, in fact, announced a cut in entitlements of one kind or another," he said. "But the truth is that most of the entitlements that the government has handed out in the past 10-15 years are desperately needed."

Instead, he explained, the Indian people expect to see government departments tightening their own belts.

"What austerity actually does wind up meaning here is a very sort of strange Gandhian thing," Sharma added, referring to the philosophy espoused by the country's independence leader Mahatma Gandhi. "We want our leaders, and our government, to be demonstrating some sort of personal commitment to an austere lifestyle."

The government has also announced that it will cut 10 percent of discretionary spending, and that it will put a hiring freeze on the civil service. Analysts, however, say that's unlikely to make much of a dent in India's $91 billion deficit.

Copyright 2012 National Public Radio. To see more, visit http://www.npr.org/.

Transcript

(SOUNDBITE OF MUSIC)

DAVID GREENE, HOST:

NPR's business news starts with a slowdown in India.

India's latest economic figures show that growth has slowed and the forecasts for the near future are gloomy. The government is under pressure to get things back on track, so it's turned to a solution that we have been hearing a lot about recently - austerity.

Elliot Hannon reports from New Delhi.

UNIDENTIFIED WOMAN: The government announcing austerity drive...

ELLIOT HANNON, BYLINE: In Europe, the concept of austerity has meant deep and painful cuts in government spending. India's effort, however, looks a little different.

UNIDENTIFIED WOMAN: ...drive government banning its departments from holding meetings and conferences in five-star hotels, foreign travel also to be restricted.

UNIDENTIFIED MAN: Good evening sir, welcome to The Oberoi.

HANNON: Cutting back on Government meetings in glitzy hotels like this one in New Delhi seems like window-dressing. But making deep spending cuts in India is particularly difficult. Voters see government largess as a right - and usually applaud pork barrel spending.

Mihir Sharma, a columnist at The Business Standard, says the government is trying to combat poverty, malnutrition and other critical needs.

MIHIR SHARMA: And a Snotty-nosed 27-year-old analyst on Wall Street might be concerned that the government has not, in fact, announced a cut in entitlements of one kind or another. But the truth is that most of the entitlements that the government has handed out in the past 10 to 15 years are desperately needed.

HANNON: Anyway, says Sharma, the concept of austerity is a bit different in India.

SHARMA: What austerity actually does wind up meaning here is a very sort of strange Gandhian thing, which is that we want our leaders and our government to be demonstrating some sort of personal commitment to an austere lifestyle.

HANNON: The government has also said that it will cut 10 percent of discretionary spending, and is putting a hiring freeze on the civil service. But analysts say that's unlikely to make much of a dent in India's $91 billion deficit.

For NPR News, I'm Elliot Hannon in New Delhi. Transcript provided by NPR, Copyright National Public Radio.