Says Govt has walked the talk on fiscal consolidation

Finance Minister P. Chidambaram today expressed hope that the Reserve Bank of India will take note of the fiscal consolidation efforts taken by the Government in Budget 2013-14.

The Government has delivered on its promise to take forward fiscal consolidation, Chidambaram told newspersons after meeting the RBI Board in the Capital on Friday.

“I had already assured that redline will not be breached under any circumstances. We have delivered on fiscal consolidation by keeping the fiscal deficit within (targeted) 5.3 per cent of GDP. Government has walked the talk on fiscal consolidation,” Chidambaram said.

These remarks are significant as it comes ten days before the RBI’s mid-quarter monetary policy review on March 19.

Chidambaram, who briefed the RBI Board on Budget 2013-14, said that interest rate changes would entirely be the call of the central bank.

“The RBI will also take into account the economic numbers that will be out between now and March 19 while deciding on the rate cut,” he said.

Chidambaram had soon after the Budget — in the context of sports utility vehicles — noted that it was high interest rates that dampened demand for such vehicles and not the Government move to hike excise duty.

Chidambaram said that the Government has been fiscally prudent for 2013-14.

This is in the sense that gross borrowing target for the next fiscal is only Rs 10,000 crore more than the previous year’s level.

Second Supplementary

Asked whether the second supplementary demand for grants tabled today in Parliament will have any negative impact on the fiscal deficit situation, he replied in the negative.

“It doesn’t (alter the fiscal situation). All those have been provided for. The entire cash outlay (in the second supplementary) has been provided in the revised estimates,” Chidambaram said.

The Government on Friday sought Parliament approval for additional spend of Rs 49,715 crore, which included a net cash outgo of Rs 40,967 crore.

As much as Rs 39,441 crore will go as cash spend for food, fuel and fertiliser subsidies.

(This article was published on March 8, 2013)
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