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'India sure to meet 2003-04 deficit target'
March 11, 2003 15:58 IST
India is confident of meeting next year's fiscal deficit target of 5.6 per cent of GDP as it expects a reinvigorated privatisation drive and robust economic growth to boost revenues, a senior official said.
Successive governments have failed to meet their targets for the fiscal deficit, which has been higher than 5 per cent of gross domestic product for the past few years.
International credit rating agencies cite India's large deficit as a major hurdle preventing it from attaining the double-digit growth it needs to cut widespread poverty.
"We will definitely be able to meet the fiscal deficit target for next year," Ashok Lahiri, economic advisor to the government, said.
Late last month, the union government raised its forecast for the fiscal deficit in the current year to March 31 to 5.9 per cent of GDP from 5.3 per cent, mainly because proceeds from privatisation are likely to fall way short of the targeted Rs 120 billion.
Between April and December 2002, the government raised just a quarter of this target from sales of stakes in 13 state-run firms. It is still to hold sales planned for January-March.
But the government hopes to complete selling stakes in cash-rich refiners Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd within six to eight months.
"When you look at divestment receipts, there are definite reasons to believe divestment targets will be met next year," Lahiri said.
The government hopes to raise Rs 132 billion next year from stake sales, including the in two refiners, whose proposed privatisation faced stiff opposition from within and outside the government this year, putting a question mark on the future of the whole drive.
The government has forecast that the Indian economy, Asia's third largest and the world's 12th biggest, will grow 6.0 to 6.5 per cent in the fiscal year starting in April, after expanding by just 4.4 per cent this year, when a drought hurt farm output.
The combined deficit of the federal and state governments is now about 10 per cent of GDP, with several state governments hard put even to pay their employees.
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