Growth fiscal consolidation top challenges for Pranab

Growth fiscal consolidation top challenges for Pranab

By: || Updated: 15 Mar 2012 08:51 PM

Finance minister Pranab Mukherjee will present the budget for
2012-13 on Friday against the backdrop of a sharp slowdown in growth,
deteriorating fiscal conditions, continuing inflationary pressure and
political turbulence.

This will be the seventh time Mukherjee will be presenting budget in the
Lok Sabha, the second highest number of time by any finance minister.
Mukherjee had presented budgets for three consecutive years in early

The maximum number of 10 budgets was presented by former prime minister
Morarji Desai. He held the finance portfolio from 1959-64, 1967-70 and
between 1977 and 1979.

Mukherjee is facing a huge challenge of reviving economic growth, which
has slowed down over the last six quarters.

The country's gross domestic product (GDP) growth fell to three year low
of 6.1 per cent in third quarter of the current financial year. It was
recorded 7.7 per cent in the first quarter and 6.9 per cent in the second
quarter of the current fiscal.

According the Central Statistical Organisation data, economic growth is
expected to fall to 6.9 per cent for the fiscal ending March 31, against
the budgetary target of around nine per cent.

The Economic Survey, which was tabled in Parliament on Thursday, projected
economic growth at 7.6 per cent for 2012-13 and 8.6 per cent for 2013-14.

Fiscal situation has worsened this year. Fiscal deficit is projected to
increase to 5.6 per cent of the GDP as against the budgetary target of 4.6
per cent.

Despite the recent moderation, inflationary pressure continues and the
Reserve Bank of India said in its mid-quarter review on Thursday that it
would resurface if the government did not control its spending.

The survey, presented a day before the annual budget, said inflation will
remain in the range of 6.5-7 per cent by end of March.

However, it said that fiscal consolidation was the only way to keep
inflation down.

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