Agencies, New Delhi
As the UPA II government completes 10 years in office and faces Lok Sabha polls, Finance Minister P Chidambaram today outlined his vision for the future setting a target of reducing the fiscal deficit to three per cent by 2016-17 and remaining below that level always.
Commending his last Interim Budget to the Lok Sabha amid sloganeering, the Finance Minister observed that not many had noted the fact that India was the 11th largest economy in the globe in terms of size of the GDP and greater things were in store.
India’s nominal GDP will rank third after the United States and China in coming three decades. The fortunes of China and India will have significant impact on the rest of the world and therefore, the country owes a responsibility not just to itself but to the whole world to keep the economy robust.
‘’I have broken down the steps toward those goals into the tasks that must be undertaken by the Government of the day. I crave your leave to identify ten such tasks,’’ Mr Chidambaram remarked.
India had contained its fiscal deficit for 2013-14 at 4.6 per cent below the 4.8 per cent red line he had drawn in the last budget. The target for next year would be 4.1 per cent.
Similarly, the Current Account Deficit (CAD) which stood at 88 billion US dollars last year had been contained at 45 billion US dollars. The economy was expected to add 15 billion dollars to its foreign exchange reserves this fiscal, the Finance Minister said.
The identified ten tasks by the Finance Minister included pinning down the fiscal deficit figure below 3.1 per cent after 2016-17 and finance the Current Account Deficit through foreign investments — FDI, FII or ECB or any other foreign inflow and moderate inflation because the country was aiming at high growth. The RBI must balance price stability and growth while formulating monetary policy, the Minister said.
The financial sector legislative reforms commission that required no change in legislation must be implemented immediately to build infrastructure and add huge quantity of new infrastructure through PPP model must be widely used.
The focus should be on manufacturing especially for export and provide all possible rebates on central and state taxes on exported products. There should be a minimum tariff protection to incentivise domestic production, he said.
On future subsidies, the Minister said they should be given to only those absolutely deserving and needy. The cities, he said, will be ungovernable and unlivable, if the issue of decay was not addressed.