News / Asia

India Growth Plan: Trim Fiscal Deficit, Woo Foreign Investors

Indian Finance Minister Palaniappan Chidambaram, center, arrives at Parliament to present the annual budget in New Delhi, February 28, 2013.
Indian Finance Minister Palaniappan Chidambaram, center, arrives at Parliament to present the annual budget in New Delhi, February 28, 2013.
Anjana Pasricha
India’s finance minister is pledging to revive economic growth by trimming the country’s fiscal deficit. He also says India is in critical need of foreign investment to reverse the worst slowdown in a decade for Asia’s third largest economy.  

Speaking to parliament during the presentation of the country's annual budget, Finance Minister P. Chidambaram vowed to cut India’s fiscal deficit to 4.8 per cent in the next fiscal year.  He said the country needs to make tough spending decisions.

"I have no choice but to rationalize expenditure. We took a dose of bitter medicine. It seems to be working," he said.

India’s fiscal and current deficits have raised concern of a downgrade by rating agencies.   

However, government spending will rise by about 16 per cent in the next year. To meet those expenses, the Finance Minister announced a temporary tax on the super rich - those with an annual income of about $200,000 - and on local companies with an income of over $2 million.

Minister Chidambaram acknowledged that the Indian economy, which has slowed to a decade-low of about five percent, is in a trough. He says restoring high growth is a challenge, but that he is optimistic about the future.  

"There is no reason for gloom or pessimism," he said. "Even now, of the large countries of the world, only China and Indonesia are growing faster than India in 2012-13. And in 2013-14, if we grow at the rate projected by many forecasters, only China will grow faster than India.”

The government estimates that India’s economy will grow by over six percent in the next fiscal year, after slipping to five percent in the last year.

Chidambaram focused on winning back foreign investors assuring them that India will be business friendly.

He pointed out that India needs $75 billion to finance its current account deficit, or trade imbalance, which has grown rapidly due to massive imports of oil, gold and coal.
 
"I have been at pains to state over and over again that India does not have the choice between welcoming and spurning foreign investment. Foreign investment is an imperative," he said.

Foreign investment fell last year as investors were alienated by a series of unexpected tax proposals, by corruption scandals and India’s tough regulatory regime. Opposition parties have also opposed the government’s decision to open the retail sector to foreign supermarkets.

Prime Minister Manmohan Singh expressed hope that the measures announced will revive the economy and that India will return to growth levels of about eight percent in two to three years.

Forecasters say returning India to those levels of growth will depend on the government’s willingness to reduce spending, initiate reforms and control inflation.

You May Like

UN Watchdog Urges Israel to Probe Possible Gaza War Crimes

More than 2,100 Palestinians, most of them civilians, were killed in a 51-day war in Gaza, along with 67 Israeli soldiers and six civilians in Israel More

New Kenyan 'Thin SIMs' Poised to Transform African Mobile Money

Equity's new technology is approved in African nation for one-year trial, though industry leader Safaricom says thin SIMs could lead to data theft and fraud More

Solar's Future Looks Brighter

New technology and dropping prices are contributing to a surge in solar power More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Talks to Resume on Winter Gas for Ukrainei
X
Al Pessin
October 25, 2014 4:21 PM
Ukrainian and Russian officials will meet again next week in an effort to settle their dispute over natural gas supplies that threatens to leave Ukraine short of heating fuel for the coming winter. VOA’s Al Pessin reports from London the dispute is complex, and has both economic and geopolitical dimensions.
Video

Video Talks to Resume on Winter Gas for Ukraine

Ukrainian and Russian officials will meet again next week in an effort to settle their dispute over natural gas supplies that threatens to leave Ukraine short of heating fuel for the coming winter. VOA’s Al Pessin reports from London the dispute is complex, and has both economic and geopolitical dimensions.
Video

Video Smugglers Offer Cheap Passage From Turkey to Syria

Smugglers in Turkey offer a relatively cheap passage across the border into Syria. Ankara has stepped up efforts to stem the flow of foreign fighters who want to join Islamic State militants fighting for control of the Syrian border city of Kobani. But porous borders and border guards who can be bribed make illegal border crossings quite easy. Zlatica Hoke has more.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.
Video

Video US ‘Death Cafes’ Put Focus on the Finale

In contemporary America, death usually is a topic to be avoided. But the growing “death café” movement encourages people to discuss their fears and desires about their final moments. VOA’s Jerome Socolovsky reports.
Video

Video Ebola Orphanage Opens in Sierra Leone

Sierra Leone's first Ebola orphanage has opened in the Kailahun district. Hundreds of children orphaned since the beginning of the Ebola outbreak face stigma and rejection with nobody to care for them. Adam Bailes reports for VOA about a new interim care center that's aimed at helping the growing number of children affected by Ebola.

All About America

AppleAndroid