NEW DELHI (AP) — India’s finance minister Thursday unveiled a national budget with a promise to put Asia’s third largest economy back on a path of high growth and to check runaway inflation and the fiscal deficit.
Palaniappan Chidambaram told Parliament that attracting foreign investment was crucial to stemming India’s economic slowdown and getting the nation back to fiscal health, which meant the government had no choice but to cut spending.
He told lawmakers that country was also facing a current account deficit crisis due to huge imports of oil, coal and gold and a slowdown in exports.
Chidambaram said India would need around $75 billion to bridge the current account deficit and he proposed to achieve this through foreign investment and external commercial borrowings. The current account is a broad measure of trade and investment balances with the rest of the world.
“India at the present juncture does not have the choice of welcoming and spurning foreign investment. We need to welcome foreign investment,” he said.
The budget comes against the backdrop of a downhill slide in India’s economic growth from earlier levels of 9 per cent to about 5 percent in the past four quarters.
The economy was projected to grow about 5 per cent this fiscal year ending March, far below the 7.6 per cent growth projected in last year’s budget and prompting calls from economists for an increase in the pace of economic and financial reforms.
In the run up to the budget, the finance ministry on Wednesday projected India’s growth at between 6.1 per cent and 6.7 per cent in the fiscal year ending March 2014.
Opposition political parties and labor unions are opposed to government efforts to open up the key retail, aviation, banking and insurance sectors. Last week, India’s trade unions and bank employees unions held a country-wide strike to oppose the reforms.