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India Strong Economic Growth Help Reduce Deficit

Headache on the fiscal deficit is not only Greece, Ireland, such European countries as the “BRIC”, one of India’s position in this regard are far from easy. However, more fortunate than the former, the Indian economy has shown strong growth, making markets in India have confidence to complete deficit reduction targets. Market is widely expected, November 30 baked India third Jidu GDP data Jiang remained on Taishi, the growth rate is likely to be as high as 8.2%. “This will be India’s third consecutive quarter of economic growth remained at above 8%.” Some economists said the strong economic growth will not only help the Indian government to provide more subsidies for the production of inflation, but also conducive to the completion of this year The deficit reduction targets.

Government of India had the goal is to bring the fiscal deficit-GDP ratio from 6.9% last year down to 5.5% in 2010. “Appropriate Government of India, government subsidies are conducive to control domestic inflation situation and thus maintain the momentum of economic growth.” Development Credit Bank in Mumbai, the fixed-income trading business ethics, said Toru November 25, while the economy has maintained rapid growth and increased revenues in India making “I think that the fiscal deficit in India India’s economic growth prospects will not result in any significant harm.” This year, the Government of India are manufacturers of food and fertilizer to give financial subsidies, August crude oil producer in India has given 140 billion rupees in subsidies. Indian Finance Minister Mukherjee on November 15 proposed to the Parliament, the Government should be allowed to revert to chemical manufacturers to provide additional subsidies of 500 billion rupees. Financial subsidies for the moderate inflation in India set a “contribution.” Data show that wholesale prices increased in India in October this year April 11% of the all-time high to moderate to 8.58%. The Indian Ministry of Trade on November 25 that, as of November 13th the week, a moderate slowdown in food prices in India to 17 months to the lowest point.

“Although India this year increased the amount of food and fertilizer subsidies, but the Indian government while in June 25 release of gasoline and diesel prices, government-run refineries to reduce the amount of loss.” Economists said, the short term Look, the lifting of price controls on petrol and diesel will increase the risk of inflation in India, but in the long term, it will benefit the Indian economy. In addition, some of the Indian government bond auction also increased revenue. Earlier this year, the Indian government on the 3G broadband wireless access license and license auction was a great success. Data show that the two auction to obtain revenue of Rs 1.06 billion, making India in April to September year deficit reduction rate of about 34.9% of deficit reduction targets. In India, the Indian Ministry of Finance, the bonds held by foreign investors, increase the limit to $ 30,000,000,000 50%, India Securities and Exchange Commission on November 26 that India will continue its first companies to foreign investors and government bonds auction. Analysts said the move will undoubtedly further the Government of India to resolve the budget deficit pressures.

Data show that, thanks to strong economic growth and government efforts, in India this year between the months April to 9-year revenue rose 25.7% to 2.33 trillion rupees. Indian Prime Minister Manmohan Singh has estimated India’s economic growth for 2010 of 8.5%, will be India’s fastest pace in nearly three years. Some experts said the rapid economic growth will help create more job opportunities, and further stimulate consumption and to control the fiscal deficit scale. Citigroup economist in Mumbai, said Luo Hai Nepal, given the strong economic growth in fiscal revenue in support of the Government of India will eventually be able to achieve the 2010 deficit reduction targets. Widely expected in the market, India will have the ability to control its fiscal deficit of optimism, the Indian government bonds in November in nearly 6 months to maximum gain, and as of November 29, India and the U.S. 10-year bond yields from the difference between 551 points earlier this month, fell sharply to 509 points.

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