Union Budget 2013-2014: Fiscal Deficit, Current Account Deficit and Inflation

Union Budget 2013-2014: Fiscal Deficit, Current Account Deficit and Inflation

􀂉􀂉 The purpose of Budget to create economic space and find resources to achieve

the objective of inclusive development.

􀂉􀂉 Dr Vijay Kelkar Committee made its recommendations to Government

in September 2012. A new fiscal consolidation path with fiscal deficit at

5.3 %  of GDP this year and 4.8 %  of GDP in 2013-14 announced by

the Government.

􀂉􀂉 Foreign investment in an imperative in view of the high current account deficit

(CAD). FII, FDI and ECB three main source of CAD Financing. Foreign

investment that is consistant with our economic objectives to be encouraged.

􀂉􀂉 Development must be economically and ecologically sustainable and

democratically legitimate.

􀂉􀂉 Battle against inflation must be fought on all fronts. Efforts in the past few months

have brought down headline WPI inflation to about 7 %  and core inflation

to about 4.2 percent.

􀂉􀂉 Food inflation is worrying but all possible steps to be taken to augment the supply

side to meet the growing demand for food items.

􀂉􀂉 Government expenditure has both good and bad consequences and trick is to

find the correct level of Government expenditure.

􀂉􀂉 Faced with huge fiscal deficit, Government expenditure rationalised in 2012-13.

Some economic space retrieved. Space to be used to further Government’s socioeconomic

objectives.

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