India working on ‘credible’ plan to cut deficit
‘There is an imperative need for fiscal
consolidation’ :
INDIA: Indian Finance Minister P. Chidambaram said Monday the
government was working on “a credible and feasible” plan to reduce its
yawning budget deficit, which has alarmed investors and ratings
agencies.
“There is an imperative need for fiscal consolidation,” Chidambaram
told reporters. “It is our intention to announce a credible and feasible
path of fiscal consolidation beginning this year.” The government's
annual budget in March, which saw a deficit target of 5.1 percent of
gross domestic product for this year, has been hit by a slump in tax
revenues caused by weakness in the economy and a surging subsidy bill.
In one of a string of recent measures designed to spur the economy and
tackle government overspending, Prime Minister Manmohan Singh's cabinet
announced a cut in subsidies for diesel and cooking gas. “The reform
momentum will continue,” Chidambaram pledged.
Investors have welcomed the recent reform measures announced by the
government, with the stock market up nearly 10 percent since the end of
August.
Ratings agency Standard and Poor's warned in June that India could
lose its investment-grade rating unless it took urgent action to balance
its books and rein in public spending.
Chidambaram also said he expects economic growth to increase from the
5.5 percent registered in the first fiscal quarter.
“There is no reason growth should stagnate at 5.5 percent in all four
quarters,” he said as he predicted a rise in investment.
AFP |