India Keeping Austerity Stance To Contain Deficit

The Indian government will have to rein in spending and cut subsidies to meet its fiscal deficit target, the country’s finance minister said on Monday, underlining that an austerity drive will not be blown off course by an election due next year.

P. Chidambaram told Reuters ahead of a trip to the United States – where one stop will be to woo investors on the West Coast – that he will not allow the deficit to cross a “red line” set at 4.8 percent of gross domestic product this fiscal year.

“We’ve issued austerity instructions, it will bring us some savings,” he said.

The finance minister’s vow to contain the deficit means there will be little room ahead of a tough election to spur growth, which has slumped from a double-digit pace in early 2010 to below 5.0 percent, its lowest in a decade.

CNBC

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