Govt hopeful on fiscal deficit target despite 2G setback

The government is taking steps to revive growth and will be able to meet the fiscal deficit target despite lukewarm response to telecom spectrum auction, India's Finance Minister P Chidambaram said Friday.

"There is still time and I don't think we should spread pessimism or cynicism. Disinvestment process will start and the spectrum (auction) process will also continue," he said at a press conference.

Chidambaram's comments come in the backdrop of lukewarm response to the 2G spectrum auction which could fetch the government only Rs 9,407 crore as against the target of Rs 40,000 crore. The government intends to go in for another of spectrum auction before the end of the current fiscal.

"We still have good time of four-and-a-half months and therefore it is too early to say that we won't reach the target. It is my intention to reach the target," he said.

He said that the government would carry forward Rs 30,000-crore disinvestment programme and achieve the revised fiscal deficit target of 5.3 per cent of the gross domestic product (GDP) in 2012-13.

On slowdown, he said, the economy is "challenged" but the government is taking a number of steps to revive growth.

"Only this morning you have read that eurozone is formally in recession. We are nowhere near that situation. Indian economy is still growing at 5.5 per cent", Chidambaram said.

He exuded the confidence that economy will "pick up in third and fourth quarters. Our goal is to tide over this difficult period and end the year on reasonably satisfactory note".

The minister further said that he would endeavour to "present a more balanced Budget for the next year. I hope that growth will revive and move on to the high growth track."

The growth rate slipped to nine-year low of 6.5 per cent in 2011-12. The economic expansion is estimated to be 5.8 per cent in the current fiscal. The growth rate in the first quarter was 5.5 per cent.

Indian economy was growing at over nine per cent before it came down to 6.7 per cent in 2008-09 due to the impact of 2008 global financial meltdown.

As regards the fiscal deficit, the Finance Ministry has revised the target to 5.3 per cent of the GDP from 5.1 per cent estimated in the budget.

Concerns are being expressed over the ability of the government to meet the revised fiscal deficit target in view of the lukewarm response to the 2G spectrum auction and a non-starter Rs 30,000-crore disinvestment programme.

"I am confident that we will be able to meet 5.3 per cent fiscal deficit target", the minister said, hoping that political parties would appreciate the economic situation and support of the government in carrying forward the heavy economic agenda in the forthcoming session of Parliament.

"We sincerely hope that the forthcoming session will be a productive one and many bills will be passed...My suggestion is that not one issue should be blown out of proportion. There are many very important issues that concern the welfare of people and future of country", Chidambaram said.

The Opposition parties are proposing to corner the government on the issue of opening of multi-brand retail to foreign investors. The government allowed FDI in multi-brand retail through an executive order.

Replying questions on Enforcement Directorate probing violation of Foreign Direct Investment (FDI) norms by American retail giant Walmart, the Minister said, "I have read in the paper that ED is investigating the Walmart.

"But unless, a formal report is made to me, which is not everyday, I would not have the details of investigation," he said.