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Overturning fears of foreign investors about fiscal deficit, Finance Minister P Chidambaram has said that India was committed to reducing its fiscal deficit and would achieve the target of 3 per cent in 2016-17.
He said, “India will reduce the fiscal deficit until we reach the target of 3 per cent in 2016-17 or perhaps a little earlier.”
Chidambaram said the final reading of last year’s fiscal deficit would come to below 5.3 per cent.
“When the actual numbers are out in the next couple of months, I’m confident it will probably be 5.1 per cent,” he said.
He pointed to the stimulus measures taken by the government, after the 2008 global economic crisis had driven fiscal deficit and inflation “out of control”.
“It appears that while the first stimulus package was necessary, the second stimulus package was doubtful and the third stimulus package was perhaps avoidable,” Chidambaram said at a breakfast meeting organised by the Canada-India Business Council here yesterday.
The Minister said that India was on the path of fiscal consolidation.
“I said in the year 2012-13 that I will bring fiscal deficit down to below 5.3 per cent, and going forward, I will reduce the fiscal deficit every year by 0.6 per cent until we have achieved the target of 3 per cent in 2016-17. I said these are red lines. I will not breach these red lines,” the Minister added.
India-Canada bilateral trade ties
During Harper’s visit to India in November 2012, both countries committed to increase annual bilateral trade to $15 billion by 2015.
Referring to bilateral trade and investment between the countries, Chidambaram said that while imports and exports were roughly matched in both directions (with total trade approaching over $5 billion in 2012 as against $4 billion in 2010), the same was not true for bilateral direct investment.
Over 100 top executives of Canadian companies, Nirmal Verma, Indian High Commissioner to Canada; Stephen Beck, Canadian High Commissioner to India; and top officials of Finance Ministry and banking sector attended the meet.
Dispelling fear of foreign investors regarding current account deficit, the Minister said that India was not immune to global economic crisis.
India’s economic growth was robust (9 per cent) between 2006 and 2008 and it would gain momentum in next two three years.
India would be seventh largest economy in two-three years and fifth largest economy by 2020, Chidambaram said.
Due to global financial overturns, India faced two major difficulties: namely fiscal deficit and inflation.
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