New Delhi: Amid speculations that the Congress would dole out more funds to woo voters in the Interim Budget 2014, Finance Minister P. Chidambaram, who began the budget speech amid chaos in Parliament, said that 2013/14 current account deficit was at $45 billion and promised to add $15 billion in foreign exchange reserves by the end of the fiscal year.
Asia's third-largest economy is facing its worst economic slowdown in nearly a decade, with shrinking manufacturing, slower jobs growth and high inflation limiting the government's ability to offer sops to voters or companies to boost growth.
Opinion polls predict defeat for the Congress-led ruling alliance in elections due by May amid widespread discontent with its mismanagement of the economy, high inflation and corruption scandals.
Officials say Chidambaram is likely to make a last-ditch attempt to win back voters by announcing more funds for health, rural jobs, roads and food subsidies, and to speak about the government's achievements in the last 10 years.
In an election year, India presents an interim budget to parliament for approval for planned expenditure for three to four months, but leaves the next government to take major policy steps in the full-year budget after the polls.
Chidambaram is expected to cut factory-gate duties on products like autos to support the manufacturing sector, extend an interest subsidy on bank loans to exporters, farmers, and offer tax concessions for poorer regions.
ECONOMY LOSING STEAM
Industrial output has fallen 0.1 percent in the first nine months of 2013/14 fiscal year, and annual car sales declined by about 5 percent.
Since taking charge last August, Chidambaram has taken many steps such as reducing spending and gold imports to rein in the fiscal and current account deficit that helped stave off the threat of credit rating downgrades last year.
But he has made limited headway in taming persistently high inflation and shoring up economic growth.
The economy is projected to grow by 4.9 percent for the current fiscal year ending in March, much lower than the more than 9 percent growth seen before the 2008 global financial crisis. Annual retail inflation remains uncomfortably near 9 percent.
Chidambaram is likely to project near 6 percent GDP growth and a fiscal deficit target of 4.2 percent of gross domestic product for coming 2014/15 fiscal year.
Highlights of the Budget speech:
*2013/14 GDP growth in third and fourth quarters will be at least 5.2 percent
* To add $15 billion in foreign exchange reserves by the end of the fiscal year
* 2013/14 current account deficit seen at $45 billion
