India will limit the fiscal deficit for 2013-14 to below 4.8 percent of gross domestic product, finance minister P Chidambaram said on Wednesday.
Speaking at the India Summit conference organized by The Economist magazine in New Delhi, Chidambaram said the fiscal deficit target is a red line that would never, never be breached. The fiscal deficit for 2012-13 is expected to be at around 5 percent of gross domestic product, government sources said earlier this month.
Right now, he said, the current account deficit (CAD) situation is more worrying than fiscal deficit. The minister expects CAD to be below 5 percent in 2012-13.
Chidambaram said given the growth projections in the world economy, it may be difficult to dramatically increase exports and India may have to look at ways to restrain imports.
However, he dismissed fears about India’s deficit being mainly financed by short-term volatile foreign institutional investor inflows. Chidambaram said foreign institutional investments in India have always seen a growth except for one year after the global financial crisis. “The FIIs have invested about USD 11 billion into India year-to-date,” he highlighted.
He expects India’s growth to be better than most of its BRICS peers.
Committing to carry forward the economic reforms programme in the remaining term of UPA-II, Finance Minister P Chidambaram today said the government will take more executive actions in the next two to four months and sought cooperation of the main opposition party to push through important bills in Parliament.
Ruling out early elections, the Minister said the government would last for 13 months more and would continue to take small but significant steps to ensure that the country achieves its potential growth rate of 8 per cent.
“There is much more to be done. The remaining bills have to be passed. There are many more executive actions that have to be taken… some of these are executive actions which we will take in the next 2-4 months,” the FM said.
