(MENAFN) Indian government vowed to cut its budget deficit through lowering subsidies and raising taxes, Associated Press reported.
Finance Minister Pranab Mukherjee said that current fiscal year, ending in March, may see budget deficit at 5.9 percent. That is by far wider than India previously targeted at 4.6 percent of gross domestic product.
The budget, which must be approved by Parliament, also delivered a blow to foreign investors in the form of a new tax liability, retroactive to 1962, on overseas transfers of Indian assets.
Mukherjee pledged to improve the quality of government spending by cutting subsidies to below 2 percent of GDP.
He said that subsidy spending for the current fiscal year inflated from unexpectedly high global oil prices, which increased the cost of India's fuel and fertilizer subsidies.
India eyes raising USD6 billion from selling stakes in state-run companies next fiscal year, he said. The government raised USD2.8 billion only from asset sales this year, lower than USD8 billion targeted.
Mukherjee also said that India would widen greater foreign investment in the aviation and power sectors, as well as in corporate debt, and doubled its allotment of tax free bonds for infrastructure projects.
Optimistic Mukherjee expected economic growth to accelerate to 7.6 percent next fiscal year, up from 6.9 percent this year.