India targets 10% growth

NEW DELHI – India’s finance minister announced a populist budget yesterday, targeting the nation’s poverty-stricken masses at the same time as pledging strong growth and fiscal prudence.

Finance Minister P. Chidambaram forecast Asia’s third-largest economy would log 8,1 per cent for the current fiscal year ending in March and said the government was aiming for growth of over 10 per cent in the next few years.”I believe that growth is the best antidote to poverty,” Chidambaram told parliament, pledging to keep up the “assault on poverty and unemployment.”The Congress-led government, brought to office after a surprise victory in 2004 by support from India’s poor rural masses and facing five state elections this year, announced a slew of social-spending programmes at the same time as holding the line on personal and corporate incomes taxes.Social measures included a 31,5 per cent hike in education spending and a 22 per cent rise on health and family welfare outlays, plus a 54 per cent rise in funds to improve infrastructure and bring basic amenities to rural India.India’s poor roads, railways, ports and other infrastructure are seen by economists as key hurdles to achieving higher growth.Prime Minister Manmohan Singh told reporters the budget was aimed at the “common man” and that the finance minister had laid the foundations for strong growth.In a move that pleased financial markets, the finance minister announced the fiscal deficit would fall to a better-than-expected 4,1 per cent of Gross Domestic Product (GDP) for the year to March 2006, instead of the 4,3 per cent initially forecast, and then to 3,8 per cent the following year.”Last year, I reluctantly pressed the pause button on fiscal correction,” he said.”I believe that I have redeemed my promise that the process of fiscal correction will be resumed in 2006/07.”Chidambaram said the government would maintain an “unrelenting emphasis on fiscal prudence.”Analysts praised the government for its efforts to rein in the deficit, long a worry of international ratings agencies which see high borrowing as an impediment to growth.”This is the biggest achievement of this government,” Ruchir Sharma, Morgan Stanley managing director, said.In other moves, the government cut customs duties to 12,5 per cent from 15 per cent to bring India closer in line with East Asian rates.Chidambaram said the government wanted to double India’s share of world exports to 1,5 per cent by fiscal 2008/09.In addition, he announced measures to boost job-generators like the textile, automobile, food processing and other industries.The minister raised military spending by 7,2 per cent to 890 billion rupees (US$19,8 billion), including 374 billion rupees for capital expenditure to upgrade military hardware.Analysts called the rise modest in light of inflation running at 4,02 per cent.Nuclear-armed India, Asia’s biggest arms buyer with one million-plus troops, and Pakistan have been engaged in a peace process since 2004 that has defused tension over the disputed Himalayan state of Kashmir which each hold in part and claim in full.- Nampa-AFPChidambaram forecast Asia’s third-largest economy would log 8,1 per cent for the current fiscal year ending in March and said the government was aiming for growth of over 10 per cent in the next few years.”I believe that growth is the best antidote to poverty,” Chidambaram told parliament, pledging to keep up the “assault on poverty and unemployment.”The Congress-led government, brought to office after a surprise victory in 2004 by support from India’s poor rural masses and facing five state elections this year, announced a slew of social-spending programmes at the same time as holding the line on personal and corporate incomes taxes.Social measures included a 31,5 per cent hike in education spending and a 22 per cent rise on health and family welfare outlays, plus a 54 per cent rise in funds to improve infrastructure and bring basic amenities to rural India.India’s poor roads, railways, ports and other infrastructure are seen by economists as key hurdles to achieving higher growth.Prime Minister Manmohan Singh told reporters the budget was aimed at the “common man” and that the finance minister had laid the foundations for strong growth.In a move that pleased financial markets, the finance minister announced the fiscal deficit would fall to a better-than-expected 4,1 per cent of Gross Domestic Product (GDP) for the year to March 2006, instead of the 4,3 per cent initially forecast, and then to 3,8 per cent the following year.”Last year, I reluctantly pressed the pause button on fiscal correction,” he said.”I believe that I have redeemed my promise that the process of fiscal correction will be resumed in 2006/07.”Chidambaram said the government would maintain an “unrelenting emphasis on fiscal prudence.”Analysts praised the government for its efforts to rein in the deficit, long a worry of international ratings agencies which see high borrowing as an impediment to growth.”This is the biggest achievement of this government,” Ruchir Sharma, Morgan Stanley managing director, said.In other moves, the government cut customs duties to 12,5 per cent from 15 per cent to bring India closer in line with East Asian rates.Chidambaram said the government wanted to double India’s share of world exports to 1,5 per cent by fiscal 2008/09.In addition, he announced measures to boost job-generators like the textile, automobile, food processing and other industries.The minister raised military spending by 7,2 per cent to 890 billion rupees (US$19,8 billion), including 374 billion rupees for capital expenditure to upgrade military hardware.Analysts called the rise modest in light of inflation running at 4,02 per cent.Nuclear-armed India, Asia’s biggest arms buyer with one million-plus troops, and Pakistan have been engaged in a peace process since 2004 that has defused tension over the disputed Himalayan state of Kashmir which each hold in part and claim in full.- Nampa-AFP