The Government will keep the fiscal deficit below 4.8 per cent in 2013-14, Finance Minister P. Chidambaram has said.
Addressing The Economist magazine’s India Summit here on Wednesday, Chidambaram said, “We are determined to go back to the path of fiscal consolidation. We have laid out a new path and I have said these are red lines. These will never, never be breached. Going forward, in 2013-14, the fiscal deficit will be contained below 4.8 per cent of the GDP.”
CAD more worrying
However, the Finance Minister said it was more important to control the Current Account Deficit (CAD). “CAD is indeed high and is more worrying than the fiscal deficit. In 2012-13, CAD is expected to be $90-94 billion. The satisfying aspect of this is that we have financed it completely without drawing down our reserves. There have been copious inflows,” he added.
CAD is estimated to be around five per cent for fiscal 2012-13 after touching record 6.7 per cent in the third quarter (October-December) of 2012-13 from 5.4 per cent in second quarter (July-September) of 2012-13.
Reforms to continue
Reiterating the Government’s commitment to reforms, Chidambaram assured investors of more executive actions, while at the same time he sought the co-operation of the main Opposition party, the BJP, to push through important Bills in Parliament.
“We will continue to take small significant steps. We will also take forward some big ideas. India’s economy will continue to reform,” he said.
Ruling out early elections, Chidambaram said the UPA Government would last for 13 months more and would continue to take small but significant steps to ensure that the country achieved its potential growth rate of eight 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 two-four months,” he added.
The Minister also sought the BJP’s co-operation to ensure passage of the land, insurance and goods and services tax (GST) Bills in Parliament, saying that economic issues should be dealt in a bi-partisan manner.
“We have listed the things we intend to do. We want the land Bill passed; insurance Bill passed with foreign direct investment at 49 per cent,” he said.
Talking about the executive actions, he listed regulators for the coal and road sectors. A rail tariff authority to fix tariffs is also on the list.
Goods, Services Tax
On Goods and Services Tax (GST), Chidambaram said there was 70 per cent chance for this important tax reform to take place in the next 13 months.
“We have reached a stage when the empowered committee has authorised us to draft it. If these drafts are endorsed by the committee, then the percentage of possibility of GST will increase,’’ he said, adding a word of caution that these drafts will need to be debated.