Finance minister P Chidambaram said on Friday he expects the economy to rebound strongly prior to the next budget. More reforms and fiscal discipline are needed to woo international investors, he said while participating in a debate on supplementary demands for grants in the Lok Sabha.
“The economy is challenged,” Chidambaram said. “But I am confident that the measures we have taken recently would put the economy back on rails. When I present the budget on the last day of February, I am confident, I would be able to present to this House a much better picture of India’s economy.”
But for that to happen, the FM implied that some tough measures are needed. “Some bitter medicine is required this year... It will restore the health of the economy,” he said.
GDP growth in the first half of the current financial year dropped to 5.4 per cent against 7.3 per cent in the year-ago period. RBI projects GDP growth in 2012-13 at 5.8 per cent, down from 6.5 per cent in 2011-12.
"We risk a downgrade of our rating to junk status, if we do not succeed to bring about fiscal consolidation," Chidambaram said.
The BJP and Trinamool Congress MPs walked out in protest and the Lok Sabha passed the first batch of supplementary demands for grants, allowing the government to raise expenditure by Rs. 32,120 crore in 2012-13.
Of the cash outgo of Rs. 30,804 crore, Rs. 28,500 crore would be to meet oil subsidy and Rs. 2,000 crore for rehabilitating Air India.