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Page last updated at 16:41 GMT, Friday, 6 June 2008 17:41 UK

India ministries to tighten belts

A BJP supporter protests against the oil price rise in Delhi
The protests continued for the second day on Friday

India's government has told ministries to tighten their belts in an attempt to deflect some of the criticism following a 10% rise in fuel prices.

The government austerity measures will curtail all non-essential spending, a move aimed at saving $1.4bn.

Ministries and government departments have been advised to cut down on foreign and air travel and not to hold meetings in five-star hotels.

Meanwhile, protests against the price rises continue throughout India.

'Moral duty'

"In the context of the continuous rise in global crude oil and commodity prices, there is tremendous pressure on government resources," senior Finance Ministry official Sushama Nath was quoted by news agency Reuters as saying.

Under the guidelines issued by the Finance Ministry, every ministry and department faces a mandatory spending cut on domestic and foreign travel, publications, professional services, advertising, office and administrative expenses.

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People across India protest at fuel costs

Earlier on Thursday, India's Prime Minister Manmohan Singh wrote to all his cabinet colleagues urging austerity in the wake of rise in oil prices.

"It is necessary for us to introduce the utmost economy in our own administrations and establishments," Mr Singh said.

"As we ask the people to bear some of the financial burden of our oil imports, it is... a moral duty to cut out all wasteful expenditure in our own establishments."

Meanwhile, protests against the higher cost of fuel continued for a second day on Friday.

In the eastern state of West Bengal, normal life was paralysed by a strike called by the opposition Trinamool Congress party.

Rail and road traffic were badly hit, and most schools, colleges, shops and markets were closed.

In the capital, Delhi, police used water cannons to disperse protesters from the opposition Bharatiya Janata Party as they tried to get close to the prime minister's office.

In the financial capital, Mumbai (Bombay), police detained 20 activists of the right-wing Hindu Shiv Sena party after they disrupted suburban train services.

Inflation fears

On Wednesday, the Indian government cut fuel subsidies and raised petrol and diesel prices by 10%. The price of a cooking gas cylinder was also raised by 50 rupees ($1.25).

The increase - the second this year - comes at a time when inflation is already at its highest level in four years.

The price rise has been severely criticised by the opposition parties and business leaders who say it will fuel inflation.

The government says it had no choice because of surging global oil prices.

India imports nearly 75% of its crude oil requirements but subsidises the cost of domestic fuel products to help contain inflation and protect the poor.


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