India Debates : Is the FM right in denying policy paralysis under UPA rule ?
I would like to start by commending Finance Minister P Chidambaram on his presentation of a balanced, growth oriented budget on Monday. A macro positive for the markets is that he has brought down the twin deficits.
At the same time, the Budget has announced further measures to improve financial efficiency and financial stability. The fiscal deficit target has not only been maintained within 4.8 per cent of GDP, but has actually been lowered to 4.6 per cent of GDP. For the coming year, the target of 4.1 per cent of GDP is in line with mediumterm goals.With the current account deficit expected to halve to 2.5 per cent of GDP, the twin deficits have been effectively contained at a time when global growth is slowing. Needless to say, this should be a major macro plus as global investors have been majorly concerned about high twin deficits.
Fiscal consolidation should prevent any further downgrade by international rating agencies, especially in the absence of any clear mandate after the general elections. We are already seeing the Indian rupee hold on relative to other emerging market peers.
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At the same time, the Budget has announced further measures to improve financial efficiency and financial stability. The fiscal deficit target has not only been maintained within 4.8 per cent of GDP, but has actually been lowered to 4.6 per cent of GDP. For the coming year, the target of 4.1 per cent of GDP is in line with mediumterm goals.With the current account deficit expected to halve to 2.5 per cent of GDP, the twin deficits have been effectively contained at a time when global growth is slowing. Needless to say, this should be a major macro plus as global investors have been majorly concerned about high twin deficits.
Fiscal consolidation should prevent any further downgrade by international rating agencies, especially in the absence of any clear mandate after the general elections. We are already seeing the Indian rupee hold on relative to other emerging market peers.
For More information on this news visit : http://www.newsx.com/
Connect with us on Social platform at : http://www.facebook.com/newsxonline
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