Indicating that prudence rather than extravagance would be hallmark of the coming Budget, Finance Minister Arun Jaitley said on Tuesday that mindless populism would burden the exchequer.
Speaking at an event organised by the Institute of Chartered Accountants of India (ICAI), Jaitley hinted at bold reform decisions.
“What India needs is a certain amount of fiscal discipline.... there is hope that bold decisions will be taken now,” the minister said.
It is widely believed that the Budget 2014-15 would unveil a plan to reduce the subsidy burden on the exchequer. Gradual increases in prices of domestic LPG and partial decontrol of the price of urea are among the measures being considered.
Rating agency Moody's said on Tuesday it expected India would gradually move towards market linked pricing of regulated fuels.
"We expect the recently elected government to increase the retail selling prices of controlled fuel products, kerosene and liquefied petroleum gas (LPG) to help control its subsidy burden," Moody's Investors Service said in a report.
Jaitley also said that while current account deficit has shown improvement, fiscal deficit and inflation were still high. “You have growth which has slowed down. You have high fiscal deficit. The rate of inflation has somewhat come down, but it is still beyond acceptable limits,” he said.
Headline retail inflation eased from a three-month peak of 8.59% in April to 8.28% in May, although higher food prices drove overall wholesale price inflation to hit a five-month high of 6.01% last month. Jaitley assured that the country has adequate food grains available to tackle inflation.
The minister said that there, however, was a renewed interest in India among global investors, which should be responded to positively. Jaitley also stressed on a stable tax structure to boost investor confidence.
“An interest has suddenly emerged on India, which has been falling off the global agenda. It is for us to respond to this opportunity,” he said.