Budget 2013-14: Govt should target fiscal deficit at 4.8% of GDP
There are two things in our opinion that make putting “Budget FY14†together especially difficult for Finance minister P. Chidambaram.
February 28, 2013 / 08:17 IST
Abheek Barua
HDFC Bank
There are two things in our opinion that make putting "Budget FY14" together especially difficult for Finance minister P Chidambaram. First, domestic growth conditions have deteriorated considerably over the past year and are yet to respond to the slew of measures taken by the government to boost domestic and foreign investor sentiment. Second, there is immense pressure on the government from international credit rating agencies and the RBI alike to check the fiscal deficit and prune unproductive public expenditure In choosing between the conflicting objectives of supporting short term demand and pruning the deficit, it seems clear that the finance minister will favour consolidation. Thus the government will likely follow its initial guidance and target a fiscal deficit target of 4.8 percent of GDP in FY14 against a fiscal deficit of 5.2 percent of GDP in FY13.What are the macro implications if indeed the government makes a serious attempt to meet the target? We have a set of questions that the finance minister needs to answer in presenting a credible budget for FY14. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
