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8:19 am - Wednesday July 26, 2017

Fiscal deficit to be contained at 3 pc from 2016-17

INTERIM BUDGETAgencies, 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.


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