Financial sector still sound & positive, avers expert

RBI projects a revenue surplus for all states at 0.54% of GDP in 2008-09

“Inflation is under control; the balance of payments position also continues to be sound. The government has shown its willingness to enact significant monetary, fiscal and sectoral policy measures to minimise the negative impact (of the global crisis) on the real economy,” he said.

On the international front, India is actively coordinating policy action with other countries for reform of international financial institutions as well as improved regulation and supervision of global finance. Recent forecasts are for around 6.7 per cent growth in 2008-09, down from 9 per cent in 2007-08.

“The fact that we are on a somewhat sounder fiscal footing than had been the case historically has allowed the government significant elbow room to act to contain the fallout of the crisis,” Kelkar claimed.

Stating that the pause on the road to fiscal reform is temporary, he wanted the central and state governments to resume medium-term fiscal reform.

The chairman added that the Fiscal Responsibility and Budget Management (FRBM) legislation had helped the central and state governments reduce deficits last fiscal. 
The Reserve Bank of India projects a revenue surplus for all states at 0.54 per cent of the gross domestic product (GDP) in 2008-09 in contrast to a revenue deficit of 2.3 per cent in 2002-03, Kelkar said.

During the same period, the fiscal deficit has reduced to 2.1 per cent of the Gross Domestic Products (GDP) from 4.1 per cent the year before.

Indo-Asian News Service