India unveils restrained pre-poll budget
Finance minister pledges to keep government spending steady, saying government has narrowed its fiscal deficit.
India’s finance minister has unveiled a restrained budget for the government’s remaining time in office until May. He said the government had narrowed its fiscal deficit and pledged to keep government spending steady.
Palaniappan Chidambaram on Monday said that India’s finances were in better shape than a year ago. He said the projected fiscal deficit for the year ending March 31 would be 4.6 percent of gross domestic product, lower than the target of 4.8 percent.
Total government subsidies in areas such as food and fuel would remain steady, allaying lingering fears the Congress party-led government would splash out on populist giveaways ahead of elections to be held by May.
He also said that Asia’s third-largest economy was starting to grow faster, predicting third and fourth quarter growth of 5.2 percent.
“Our objectives were fiscal consolidation, reviving growth cycle, and enhancing manufacturing”, the minister said while presenting the budget.
In good news for consumers, Chidambaram cut excise duty on small cars and two-wheelers from 12 per cent 8 per cent. The cut in duty will come into effect from June 20, 2014, when the new government is likely to present the full year budget. He also cut duty on consumer durables from 12 per cent to 10 per cent.
The minister’s move is understood to be aimed at providing impetus to domestic manufacturing at a time when India’s economy is growing at the slowest pace in a decade. Industrial output has fallen 0.1 per cent in the first nine months of the current fiscal year, and annual car sales declined by about 5 per cent in 2013, NDTV reported.