India plans to borrow less than estimated in the year to March 2006 to improve its fiscal deficit performance from last year when the deficit touched its lowest in nearly 8 years, the finance minister said on Thursday. India surprised analysts and the markets with its fiscal performance in the year ended March 2005 as it controlled the deficit at 4.1 percent of gross domestic product, below the government's 4.5 percent target.
The fiscal deficit stood at 1.28 trillion rupees ($29 billion) for the year ending March, way below the government's February budget estimate of 1.39 trillion rupees largely due to a fall in spending and buoyant revenue collections.
"My fiscal deficit performance last year was much better because it was at 4.1 percent (of GDP). On one hand we are happy, but we have to be cautious to do much better. So by both design and compulsion we will have to compress our borrowings this year," Palaniappan Chidambaram told reporters.
The government expects to spend nearly 1.40 trillion rupees on health, education and rural sectors in the year to March 2006 in line with an election pledge to improve the lot of the poor who voted out the Hindu nationalist-led coalition in 2004.
On a day when the finance minister said the government would curtail borrowings, the government announced twin bond auctions for 100 billion rupees.
A finance ministry statement said the sale of 7.37 percent government bond 2014 for 60 billion rupees and 10.25 percent 2021 bond for 40 billion rupees would be held on June 6.
Analysts said the Congress-led coalition government, which took power in May 2004, had been successful in shoring up revenues and slashing wasteful spending leading to an improved fiscal scorecard but they were unsure of a repeat this year.
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