The Indian government Monday presented an interim budget its last before the country goes to polls in May in which indirect taxes on cars, two-wheelers and mobile phones have been slashed in a bid to boost economic growth.
Indian Finance Minister P. Chidambaram announced the populist measures in the Parliament which will be valid from April to June this year, and could be reviewed later when the new government is formed after the general elections.
"The current economic situation demands some interventions that cannot wait for the regular budget. In particular, the manufacturing sector needs an immediate boost," he said.
The finance minister claimed that the country's economy has stabilized and showed signs of a turnaround.
"Our objectives were fiscal consolidation, reviving growth cycle, and enhancing manufacturing. I can confidently assert that the fiscal deficit is declining, the current account deficit is constrained, inflation is moderated and exchange rate is stable," he said.
He claimed that the current financial year would end on a satisfactory note with the fiscal deficit at 4.6 percent of gross domestic product, below the 4.8 percent target set by the government.
The fiscal deficit for 2014-15 has been pegged at 4.1 percent of GDP, which will be below the target of 4.2 percent set by the new fiscal consolidation path. Revenue deficit is estimated at 3 percent.
The finance minister said the current account deficit was expected to fall to 45 billion U.S. dollars in the year to March 31, down from 88 billion U.S. dollars a year earlier. He also added that economic growth for the financial year ending in March was expected to be 4.9 percent.
As part of the vision, he said a developing economy must accept that when the aim is high growth, there will be moderate level of inflation.
"The Reserve Bank of India must strike a balance between price stability and growth while formulating monetary policy," he said in his vision formula.
The interim budget came as the Congress-led government's popularity has slumped amid a slowdown in growth and a number of corruption scandals in the last five years./.