Union Budget: Desperate on deficit, govt to set to slash defence and welfare spending
to December down 6.8 percent on the year, in sharp contrast to the government's original budget plan to raise capital spending by 22 percent by March.
A analyst with rating agency Standard & Poor's said that the possibility of India losing its investment grade status has receded somewhat as a result of economic reforms undertaken by the government since last September, although there remained at least a one-in-three chance.
Policymakers say getting India's finances in order will give private players room to borrow and the confidence to invest.
A drop-off in investment, hurting growth, is blamed in part on public spending that is funded through market borrowing crowding out the private sector.
"With fiscal discipline, what will happen is that there will be larger money with the private sector, which can be used for the growth," said B.K. Chaturvedi, a senior adviser to the government on infrastructure spending.
Chidambaram will officially report the revised spending figures for 2012/13 when he presents next year's budget to parliament on Feb. 28.
"It is I who have done the math, the deficit will remain below 5.3 percent this year, next year it will be below 4.8 percent. I am not going to cross these red lines," Chidambaram told Reuters in an interview on Tuesday.
His attention has turned to spending because revenue has dropped. The economy is on track to grow about 5.6 percent this year, the lowest rate for a decade, and the government is struggling to raise $10 billion in hoped-for windfall cash from partial privatisations and mobile
Be the first to comment.
