The government should start fiscal consolidation beginning in April by reforming spending, eliminating its revenue deficit, and putting a cap on government debt, a finance ministry report said on Thursday.
The ministry's economic survey for the financial year 2009-10 urged a calibrated exit from fiscal stimulus, which cushioned India's economy from the worst of the global downturn but pushed the fiscal deficit to a 16-year high of 6.8% of GDP.
The report, presented in Parliament ahead of Friday's Union Budget, forecast economic growth at 8.25%-8.75% in 2010-11, accelerating to over 9% the year after, compared with projected growth of 7.2%-7.5% in the current year.
It also highlighted the possibility of the economy achieving a double-digit growth within the next four years, underscoring the view that the economy is on a firm footing.
Strong growth along with supply-side inflationary pressures are pushing up inflation in India. High food prices, which rose over 17% in January, could spill over into general inflation, the report said.
With the economy picking up steam, the finance minister is widely expected to start phasing out fiscal stimulus in his budget for the new financial year and reduce the fiscal deficit to 5.6% of GDP, a recent Reuters poll showed.
Source : http://www.moneycontrol.com/news/economy/growth-to-reboundprices-to-rise-economic-survey_443614.html
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