Finance ministry expects to contain Current Account Deficit within 2% and Fiscal deficit within 4.1% of GDP in FY2015
The Finance Ministry is observing that the India's Gross Domestic Product (GDP) growth is one of early signs of economic recovery. Finance Ministry expects the economy to grow at 5.7-5.9% during the current FY2015 and in 2-3 years time reclaim the high growth rate of 7%.As per the Finance Ministry, the new government took various steps for boosting growth, controlling inflation and curbing corruption among other measures. The Union Budget 2014 was its first path breaking effort to tackle all these issues upfront. Now all these efforts have started showing results.
Headline WPI Inflation after remaining persistent around 7-9% during 2011-13, is showing signs of moderation and has come down to 5.19% in July 2014.
Consumer Price Index has fallen from the levels of 8.6% in April 2014 to 7.96% in July 2014.
On account of restored business confidence and improved order book, manufacturing is showing signs of rebound and HSBC PMI has risen to 53 in July 2014 from 51.5 in June 2014.
Due to concessions in Excise duty, Passenger Vehicles sales have grown for the third month in a row, growing by 7.1% in July 2014.
Growth of 23% in the Capital goods production is a healthy indicator of recovery.
India's annual infrastructure sector growth (eight core sector) hit a nine-month high of 7.3% in June 2014, led by a surge in cement and electricity output. Due to increased foreign flows, India's Foreign Exchange Reserves have seen a surge and as in July end were US$ 320.6 billion, which is US$ 43.4 billion higher than a year ago.
Despite less than satisfactory Monsoon, food stock in Central pool is comfortable at nearly 62 million tones.
For ensuring macroeconomic stability, the Finance Ministry hopes to contain Current Account Deficit within 2% and Fiscal deficit within 4.1% of GDP during current FY2015.
In the first Budget of this Government, certain steps, which are only the beginning of a journey towards a sustained growth of 7-8% within the next 2-3 years, were outlined.
The Government is committed to the principle of "Minimum Government Maximum Governance". In the budget, it was committed to constitute an Expenditure Management Commission, which will look into various aspects of expenditure reforms including rationalisation of subsidies, to be undertaken by the Government. Since then the Commission has been constituted with the noted economist and Ex-Governor of RBI, Dr. Bimal Jalan heading it.
Besides above, the Government has already expressed through the Budget 2014-15 its intent to fulfil the promises made to the electorate.
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