NEW DELHI, June 1 India's new finance minister
vowed on Sunday to uphold fiscal discipline, despite pressure on
public finances from figures showing the economy grew by less
than 5 percent in the fiscal year just ended.
Investors are looking to see whether Arun Jaitley, also
handed the defence portfolio in Prime Minister Narendra Modi's
new government, will allow some slippage on the budget deficit
when he presents his first budget in early July.
In a post on his Facebook page, Jaitley said pulling India
out of its current economic malaise would involve "fiscal
rectitude as (a) combination of monetary and fiscal policy.
"Slower GDP growth will imply lower tax buoyancy and (a)
higher fiscal deficit," he added. "We must move towards an era
of fiscal discipline where we can reduce the fiscal deficit,
contain inflation and improve upon our growth rates."
Figures on Friday showed that India's economy grew by 4.7
percent in the year to the end of March, too slow to generate
enough jobs for the 10 million young people who enter the
workforce each year.
Weak growth has fueled speculation that Jaitley may revise
up the federal fiscal deficit of 4.1 percent of gross domestic
product originally targeted in his predecessor's interim budget
Jaitley did not name any deficit numbers, but said he would
target fiscal discipline in the near term so as to maximise
India's growth potential over the longer run.
"We must commit ourselves to this discipline," he wrote.
"Short term disciplining till we reverse the present trend will
give us long term benefits."
(Reporting by Douglas Busvine; editing by Andrew Roche)