Finance Minister P Chidambaram on Saturday said the government managed to bring the current account deficit (CAD) in 2013-14 down to $32 billion, or 1.7 per cent of gross domestic product (GDP), compared with the $45 billion estimated in the interim Budget in February and $35 billion projected towards the end of March. He added the fiscal deficit target of 4.6 per cent of GDP was also going to be met.
“We are completely satisfied that we will achieve the fiscal deficit target projected in the interim Budget. The news on CAD is, of course, extremely good. The CAD for the year that ended will be only $32 billion, against the previous year’s $88 billion,” he said in a media briefing at the Congress party office here.
Budget 2013-14 had projected fiscal deficit to be 4.8 per cent of GDP, a tad lower than 4.9 per cent the previous year. A lower CAD and fiscal deficit — a widening of both had put India at a risk of downgrade by rating agencies in the past few years — would provide comfort to the new finance minister when he presents the full Budget (likely in July) after formation of a government at the centre. Curbs on gold imports helped bring down CAD and the government might review the restrictions now.
“Once these two problems (CAD and fiscal deficit) are contained, you will find that both domestic and foreign investment will pick up going forward,” he added.
The finance minister, however, admitted tax collections fell short of the revised estimate by about Rs 11,500 crore. Direct tax collections exceeded the target by Rs 5,500 crore, but indirect tax mop-up fell short of the revised estimate by Rs 17,000 crore due to lower excise and service tax collections. This means the reduction in fiscal deficit happened mainly on account of expenditure cut.
Chidambaram said the economy would become stronger from here, adding the recent spurt in stock markets was a reflection of investors’ confidence about the stability and strength of India’s economy. He said the rally should not be attributed to positive sentiment around BJP’s prime minister candidateNarendra Modi.
“If you attribute every rise to — quote unquote in your language — ‘Mr Modi is coming’, every dip must also be attributed to Mr Modi. Please don’t make that fatal mistake. What has this got to do with who is going to be elected on May 16 (the election result day),” he said.
The Congress leader added Gujarat was just an average state and Modi’s ‘Gujarat model’ was “exaggerated and boastful”. To support his arguments, he said the state ranked fifth in compound annual growth rate in gross state domestic product, 15th in rural poverty headcount in 2011-12, ninth on the human development index, 22nd in coverage of roads in 2011, 10th in households with electricity, 12th in literacy rate, and 15th in social sector expenditure.
The finance minister said the Cabinet Committee on Investment (CCI), chaired by Prime Minister Manmohan Singh, had sped up implementation of large infrastructure projects, and as many as 15 states had come to the Cabinet Secretariat to seek advice on how to do this in their states.
Of the 169 projects considered by CCI, issues have been resolved in 108. Fresh loans to the extent of Rs 1,02,292 crore have been released to project promoters. The total cost of these 169 project is Rs 8,37,632 crore and the loan sanctioned by banks to them is Rs 2,92,658 crore.
Asked about the issue of black money of Indians in Swiss accounts, Chidambaram said India was discussing the issue with Switzerland. The European nation had replied to India’s letter seeking cooperation in providing information about Indian tax evaders. India will send its response soon. In its letter to Switzerland in March, India had threatened to take up the issue at G-20.
On the content of the letter, Chidambaram said: “It’s a long reply and the (Swiss) minister has defended the Swiss position in some matter. The minister has made conciliatory statement in one of the matters. The reply is being studied very carefully and we will send another letter in the next few days.”