NEW DELHI: India's finance minister vowed to bring the government's yawning budget deficit under control on Friday as he presented a new budget that counts on higher tax revenues to sustain social spending.
Speaking in parliament, Pranab Mukjerjee said he had laid down a road map for reducing the country's fiscal deficit, which soared to a 16-year high of 6.9 percent of economic output.
The shortfall would drop to 5.5 percent in the next fiscal year to March 2011, and then 4.8 percent in the following 12 months, though there would be no let up in the left-leaning government's focus on huge social programmes.
To increase government receipts, Mukherjee announced a host of tax measures including a plan to introduce a nationwide goods and services tax aimed at simplifying India's revenue collection system by April 1, 2011.
He also announced plans to sell stakes in state-owned companies and complete auctions of bandwidth for high-speed 3G mobile phone networks. His figures banked on higher tax revenue generated from the rapidly accelerating economy.
“We want to make this recovery broad-based,” Mukherjee said as he announced increases for education, health, rural and urban infrastructure and farmer assistance.
“Growth is only as important as what it enables us to do,” Mukherjee said, adding that the government wanted to “harness the recent economic gains to make economic growth more inclusive”.
“Inclusive growth” is the watchword of the Congress party-led government, which has promised to ensure that India's rapid expansion benefits the country's hundreds of millions of desperately poor.
He said the government wanted to revert to the nine percent economic growth it enjoyed before the financial crisis.
“I can say with some confidence that we have weathered this crisis well,” he said.
A report from the finance ministry said Thursday that the economy would rebound to pre-financial crisis growth levels of nine percent in two years and could become the world's fastest expanding in four years.
Data released Friday, however, showed that India's economic growth slowed sharply in the final quarter of 2009 to 6.0 percent year on year, hit by lower farm output after the weakest monsoon in 37 years.
The figure for the October-December period, the third quarter of India's fiscal year, compared with expansion of 7.9 percent in the previous quarter and 6.2 percent in the same period last year. AGENCIES