I'll keep it short. What beats me is this - If Shashi Tharoor stays in a 5 star hotel at his own expense, why on earth should that become an issue? How an individual spends his money is entirely his business (provided he obeys the rules of the land).
I'm no economist, but I think I have my fundamentals right when I say that the only way for an economy to survive is by commercial activity. Regardless of whether the money is spent on luxuries or necessities, the activity of spending money in exchange of goods or services is what keeps an economy rolling - and helps the people in it make a living. Austerity-measures on the individual goes directly against this. I don't think there are any examples of economies that have recovered from bad patches by curtailing spending by the individual, it is on the contrary by getting people to spend, that economies have bounced back.
Now, austerity does make sense when tax-payer money is involved. The logic being that the money spent on certain areas (like business class flights for example) can be spent on more important welfare schemes like the NREGS.
But, having said that, to expect the individual to exercise a similar discretion is Utopian and may even backfire. All this noise about austerity has nothing to do with economics, but distressingly, everything to do with politics.