Bangalore: In a bid to reboot the economy and return to the high growth path, the United Progressive Alliance (UPA) government would take proactive measures to contain fiscal deficit and current account deficit, Union Home Minister P. Chidambaram said Tuesday.
“Prime Minister Manmohan Singh, who is also the finance minister, is taking several measures to tackle fundamental issues such as containing fiscal and current account deficits and to return to high growth path,” Chidambaram told reporters here at a media interaction with group of ministers, including Union Law and Justice Minister Salman Kurshid.
Admitting that the year gone by (fiscal 2011-12) was a difficult year due to various factors, including double digit inflation, higher fiscal deficit (5.9 percent), revenue deficit (4.4 percent) and widening current account deficit (3.6 percent), the former finance minister said the measures would tighten revenue collection and control wasteful expenditure.
“We have already imposed across the board cut on non-plan expenditure. That will help in limiting the fiscal deficit to 5.1 percent in this fiscal (2012-13) and revenue deficit to 3.4 percent of the GDP,” Chidambaram pointed out.
Noting that economic growth is the function of savings and investments, the minister said additional measures were being taken to improve the savings rate and attract more investments from domestic and overseas markets to return to the high growth path.
“Similarly, the current account deficit depends on international commodity prices and the exchange rate in a volatile market, as we are import dependent on a large number of commodities, especially petroleum products. Once confidence builds, the exchange rate will stabilise. We must produce more to reduce dependency on imports, which in turn will bring down the current account deficit,” Chidambaram asserted.
He hoped the Eurozone would recover soon, as it was a major export market for Indian goods and services.
“Our major markets are the US, Eurozone and China. If these markets recover and do well, we can step op our goods and services to them. If all countries grow, it will be good for India,” Chidambaram noted.
Giving a report card on the performance of the second UPA government in the past three years, Chidambaram said despite a challenging year when developed countries the world over registered zero or no growth, India registered 6.8 percent GDP growth.
Observing that the Eurozone crisis was deeper than the 2008 global financial crisis, he said though the country registered a healthy GDP growth of 8.4 percent during the first two years (fiscal 2009-10 and 2010-11) of the UPA-II, it dipped to 6.8 percent in 2010-11 owing to international and domestic pressures resulting in lower capital inflows, sluggish exports, high import bill, widening current account deficit and volatile exchange rate.
“Compared to other countries, India continues to be a high investment destination, as a whopping $46.55 billion of foreign direct investment in 2011-12. We also continue to be a major overseas investor after the US, Britain, Canada,Germany and France. Exports contributed 22 percent to the GDP in 2011-12 from a mere 5.3 percent over a decade ago,” Chidambaram pointed out.
Reeling out comparative statistics and achievements of the UPA government since 2009, Chidambaram said millions of people across the social strata benefited from the schemes, programmes, subsidies and financial assistance provided year after year.