New Delhi: India needs to review public spending and improve its fiscal position, Union finance minister Pranab Mukherjee said on Friday, kicking-off the presentation of his Budget for the fiscal year that starts on 1 April.
He also unveiled efforts to lift agricultural production in a country where high food prices have helped push broader inflation to what some economists expect could hit 10% next month, with a push to improve farm output in the eastern part of India.
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Bond yields fell 4 basis points after Mukherjee’s remarks on fiscal prudence, as well as a December quarter GDP growth figure of 6%, which fell short of a Reuters poll forecast of 6.8% as farm output fell 2.8%.
Mukherjee said the government would present a roadmap within six months to cut the country’s public debt.
Economists polled by Reuters ahead of the budget forecast Asia’s third-largest economy would cut its fiscal deficit to 5.6% of GDP in the year starting 1 April, from a target of 6.8% in the current year, a 16-year high.
Government borrowing was forecast to rise by another 2.2% to Rs4.61 trillion ($99.5 billion), according to the Reuters poll ahead of Friday’s speech.
Mukherjee was expected to count on surging economic growth, which his ministry forecasts will grow by 8.5% in the next fiscal year, as well as higher revenues from sales of government company stakes and 3G mobile licences to forestall the need for spending cuts.
The government growth target for next year exceeds the 8% forecast in a Reuters poll of economists in late January.
Mukherjee was expected to unveil gradual measures to roll back fiscal stimulus implemented to ease the pain of the global downturn, including tax breaks to several sectors.