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Indian Finance Minister P Chidambaram has presented the interim budget on Monday ahead of the general elections due in the next three months. He asserted that India fared well compared to other developing economies during the recent volatility.
“Among emerging economy currencies, the rupee was affected least,” said Chidambaram who added that he was confident about growth figures in the next quarters of the fiscal.
“Growth in Q3-Q4 will be at least 5.2%,” asserted the Finance Minister who has earlier been critical on the US Federal Reserve’s uncoordinated monetary policy.
“We face challenges common to emerging economies,” said Chidambaram.
Since 2014 is an election year, the incumbent government presented an interim budget to the Indian parliament.
This is to seek approval for planned expenditure for three to four months. After the general elections, the newly elected government will take major policy steps in the full-year budget.
Chidambaram on Monday told lawmakers that the fiscal deficit for the current financial year will be contained at 4.6 per cent of GDP.
“Let me begin with the good news. Fiscal deficit for 2013-14 will be contained at 4.6 per cent of GDP, well below the red line that I had drawn last year,” he said.
The current account deficit will be contained at at $48 billion, while India’s forex reserves stand at $15 billion, said the Finance Minister.
Chidambaram announced more funds for defence, fertiliser and food subsidies.
The government will provide capital infusion of 112 billion rupees in state-run banks in 2014/15. Total spending on food, fertiliser and fuel subsidies will stand at 2.5 trillion rupees in 2014/15. The government will also allocate 2.24 trillion rupees to defence in 2014/15, up 10 per cent year on year.
The Finance Minister also announced a cut on excise duty on small cars, two-wheelers, and commercial vehicles to 8 per cent from 12 per cent.
The Finance Minister also spoke about the government’s achievements in the last 10 years.
He said the government was “proud of the stellar production of the agriculture sector”. Agriculture GDP growth has increased to 4 per cent and in the current year is estimated at 4.6 per cent, said the Minister.
He also noted that while, “Food grain production stands at 263 million tons. Food inflation remains main challenge.”
He said that while several steps are being taken to support small and medium manufacturing units, “Manufacturing is India’s Achilles Heel”.
Chidambaram said that the government has been successfully able to avoid a downgrade of India’s credit ratings.
“India is not facing a ratings downgrade from agencies. Our objectives were fiscal consolidation, price stability. Rating agencies have acknowledged our efforts,” he said.
Meanwhile, on Thursday an auction of telecom spectrum raked in $9.85 billion in bids for the government, which will have access to $3 billion of that upfront in the current fiscal year.
TBP and Agencies