India pledges to lower deficit, cap debt, to avert credit rating cut.

MUMBAI - Top Indian officials said they will cut the widest budget deficit among the world's largest emerging markets and curb public debt, as India seeks to avert a credit-rating downgrade.

India's government is "optimistic" it will rein in the shortfall for the year through March 31 to 5.3 per cent of gross domestic product from the previous year's 5.8 per cent. The government has no plan "at the moment" to increase its record borrowing programme, Finance Minister Palaniappan Chidambaram said on Saturday.

The deficit will be cut 0.6 per cent annually for the next five years, Mr Chakravarthy Rangarajan, Chief Economic Adviser to Prime Minister Manmohan Singh, said on Saturday in Kolkata.

"I would like to, with all the conviction and command, reiterate that the government is fully committed to contain the fiscal deficit within 5.3 per cent," Economic Affairs Secretary Arvind Mayaram said on Saturday at a conference in Mumbai. "We have a programme of disinvestment and we are confident of meeting our targets."

Credit Agricole CIB said last week that financial markets are pricing in an increasing likelihood of a credit rating downgrade to junk status.

The threat of losing India's investment-grade sovereign ranking prompted Mr Singh to reduce fuel subsidies in mid-September to tackle the fiscal gap and boost investment by allowing foreign investment in retailing and aviation. The government is also looking to curtail expenditure, Mr Mayaram said.

The US$1.8 trillion (S$2.2 trillion) economy is likely to expand 5.5 per cent in the three months ended September, Mr Chidambaram said, matching the preceding quarter's expansion.


Source : todayonline.com