Tough spending choices have to be made, as per finance minister P Chidambaram who presented the last budget of UPA on Thursday. Chidambaram unveiled a bigger than expected outlay in one of the highly anticipated budget for the coming year.
The budget expenditure will hit Rs 16.65 trillion in the coming fiscal year that begins on April 1. However, investors had reposed their faith in the Finance minister as the stock market rose slightly during the speech of P. Chidambaram. However, their jubilation was short lived as the Finance minister came with a hard-hitting statement that reflected the current financial condition of the nation.
As per the finance minister, the country faces huge fiscal deficit and some hard decisions have to be taken to rationalize the expenditure. However, P Chidambaram had a tough task at hand, as he has also to meet the aspirations of the common masses with the country heading towards general elections in the coming year.
India’s fiscal and current account deficits have alarmed investors and rating agencies. The reason for the same is that there are warning sign emitting that India’s sovereign bonds could be downscaled to the limits, unless urgent steps are not taken to rein in the uncalled for spending.
Investors had a keen eye on the developments of the day and were interested to know if the finance minister lived up to their expectations or come up with a populist budget, considering the facr that the country is about to face elections in the coming year.
A key focus of P. Chidambaram’s budget is to win over the foreign investors who have been shying away from investing in India after harsh measures adopted by the predecessor of P. Chidambaram, Pranab Mukherjee who acted hard on tax evaders.
However, P Chidambaram had initiated implementation of a series of investor friendly measures since the month of September when he implemented a series of reforms that were investor friendly. A key one of these was to allow the entry of foreign supermarkets in the country. However, the flagging economy has limited the populist measures of the finance minister and despite his willingness to introduce some more of these, he could not do the same.
The fiscal growth for 2012/13 will be around 5 percent, which is a cause of concern as per keen watchers of Indian economy. The annual economic survey that was released on the eve of the budge reflected what was perhaps going through the finance minister’s mind. P Chidambaram noted in his observations that the current economic slowdown was a wake up call and the country need to take strict measures to curtail the slowdown.
P Chidambaram was expected to present a populist budget, given the fact that the country is to face elections in the coming year and a lot depends on the ground realities that will evolve over the course of next year when the steps proposed by the finance minister will take practical shape. A brave effort indeed to present an all-pleasing budget, P Chidambaram though will have to do a lot of task management in the coming weeks.