Indian Budget 2004-05
Full Text of P. Chidambaram, Minister of Finance, Budget Speech(July 8, 2004)
III. FRBM AND THE MACROECONOMIC BACKDROP
6. The Fiscal Responsibility and Budget Management Act (FRBM) 2003 has streamlined the Budget presentation process. The Government has demonstrated its commitment to prudent fiscal and financial policies by notifying the Act and the Rules with effect from July 5, 2004. Along with the Budget, a medium-term fiscal policy statement, a fiscal policy strategy statement and a macroeconomic framework statement are being presented to the House.
7. Under the FRBM Act, I am obliged to wipe out the revenue deficit by 2007-08. However, the NCMP has proposed that we do so by 2008-09. In my view, 2008-09 is a more credible terminal year; it will also coincide with the term of this Government. Hence, I propose to move an amendment to this effect through the Finance Bill. I am committed to implementing the FRBM Act. The elimination of revenue deficit will open up fiscal space up to 3 per cent of GDP for enhanced public investment without undermining fiscal prudence.
8. The economic fundamentals appear strong and the balance of payments is robust. Although there are short term pressures on prices, the outlook for the year is benign and the Government is fully alert. Growth will be sustained by increased production and value addition in agriculture, a marked improvement in industrial production, and continued buoyancy in the performance of the services sector.
9. The Government will follow a 5-year road map to achieve the NCMP objective of bringing about rapid growth with stability and equity. Sequencing the measures in an appropriate fashion and continuing the reform process, which ushered in the era of rapid growth, are the main challenges. The Government is committed to strike a fine balance among the three mutually reinforcing objectives of growth, stability and equity.