Fiscal deficit will be contained at 4.8 per cent of GDP: P. Chidambaram
The government is facing a fall in tax collections and lower receipts from share sale in state-run companies on account of an economic slowdown.
Speaking at Petrotech conference here on Wednesday, the finance minister said we need to raise adequate resources, spend wisely and maintain fiscal prudence to accelerate economic growth.
He stressed on the need to contain fiscal deficit. “We have unflinching commitment to contain the fiscal deficit to 4.8% this year. We will then keep reducing it by 0.6% every year until we reach the target of 3% by 2016-17,” he said.
“Our effort to contain current account deficit is showing some results. Last year CAD (current account deficit) was at $88 billion with total imports worth $491 billion and oil imports have grown to $164 billion. Needless to say, a developing country like India cannot afford such a huge import bill. Therefore, we had to take some measures and those measures have helped us. I am glad to say that CAD for the current year is approximately $50 billion,” he said.
Chidambaram said the demand for oil and gas will rise as international economy gradually recovers from the great recession that had descended in Sept 2008 and Indian should also focus on energy conservation. India is the second fastest growing economy in the world and its energy requirement is huge, he said. Over 24,000 MW of power capacity was stranded due to a lack of gas, he said.
Speaking at the function Petroleum Minister Veerappa Moily said that the government would take policy decisions to ensure energy security of the country. “We are constantly reassessing and reviewing our policy models and also bringing in the necessary reforms to facilitate and incentivize the oil & gas sector and allow them to be more competitive at a global level,” he said.
He said that the next auction of oil and gas blocks would be more investor friendly. “The reforms should also position India as a viable destination for foreign investors,” he said.
“We understand India’s linkages with the global petroleum sector are deep and irreversible. Hence, our domestic hydrocarbon sector, too, should mirror the global trends and realities and accommodate, to a reasonable extent, the expectations of global stakeholders,” he added.
The policy regime of the government has always been supportive of all efforts, which are dedicated for the energy security of the nation, he said. “We are constantly taking steps that can contribute to making the framework more robust, resilient and, above all, transparent,” her added.