| NEW DELHI, July 12
NEW DELHI, July 12 India's top finance ministry
official said that plans announced in this week's budget to
stick to a fiscal deficit target of 4.1 percent of GDP are "very
credible", despite criticism from ratings agencies that the
number is optimistic.
Prime Minister Narendra Modi, who took office in May, on
Thursday unveiled a budget that focused on attracting investment
rather than reining in spending, in order to balance India's
books and revive a weak economy - an approach that fell short of
On Saturday Finance Secretary Arvind Mayaram said however
that he thought the approach was feasible.
"If you look at the numbers as they stand today, I think
it's a very credible number," he told a panel session hosted by
the Federation of Indian Chambers of Commerce and Industry on
"We are looking at bringing the investment cycle back.
That'll be the pump primer," Mayaram said, confirming that
India's government is projecting economic growth will rise to
5.8-5.9 percent this fiscal year.
He also said Modi's administration might be able to exceed
the $9.7 billion divestment target set out in the budget - which
it aims to meet by selling government stakes in both state-owned
and private companies - partly because India's stock markets
were stronger this year than they had been last year.
Asia's third-largest economy grew by 4.7 percent in the year
that ended on March 31 - the second consecutive year of growth
of below 5 percent.
While Thursday's budget contained a number of measures to
attract foreign investment and kick start infrastructure
projects, a major revival in private investment across the
economy is by no means guaranteed.
With varying degrees of severity, ratings agencies Fitch,
Moody's and Standard & Poor's have all expressed worries that
the pledge to keep the fiscal deficit at 4.1 percent in 2014/15
is unrealistic. The target was set by the previous government,
an unwieldy coalition led by the now ousted Congress party.
Two particular challenges for India's economy in the coming
months are the threat of a bad monsoon, with the annual
June-September rains that determine farmers' incomes off to a
poor start, and volatile oil prices due to civil war in Iraq.
Finance Minister Arun Jaitley, as he presented the budget in
parliament, called the fiscal deficit target "daunting" but said
he would take on the challenge. He has also vowed to cut the
deficit to 3.6 percent by 2015/16 and 3 percent the year after.
(Editing by Douglas Busvine and Sophie Walker)