An interim budget delivered by the Indian government on Monday ahead of parliamentary elections sparked fears that the country may return to an era of big budget deficits as it tries to protect itself from the global financial crisis.
Pranab Mukherjee, the acting finance minister, said India had temporarily set aside its tight public spending targets, recognising that a high fiscal deficit was “inevitable” to weather the challenges posed by recession in big economies.
“Conditions in the year ahead are not likely to be normal and, therefore, the high fiscal deficit is inevitable,” Mr Mukherjee told parliament.
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