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India needs to fast-track reforms, cut fiscal deficit to support slowing economy: ADB

New Delhi , Fri, 27 Apr 2012 ANI

New Delhi, April 27 (ANI): The Asian Development Bank (ADB) has said India requires to fast-track reforms and cut down fiscal deficit to support a slowing economy.

Managing Director-General of ABD Rajat M. Nag said India needs to restore foreign investors' confidence.

According to Wall Street Journal, observers fear that foreign investment in India could drop due to policy uncertainty created by proposals such as a retroactive tax on merger deals dating as far as back 1962.

Nag said the Indian Government must increase fuel prices to lower subsidies that have ended up straining its finances.

"The 5.1 percent [fiscal deficit] aim for 2012-13 is achievable, but we have to make some tough calls, including on fuel subsidy," Nag said.

India's fiscal deficit increased to 5.9 percent of gross domestic product in the fiscal year that ended on March 31, overshooting the budget estimate of 4.6 percent because of heavy subsidies on fuels, fertilizers and food.

"Perhaps there are too many reforms-land acquisition bill, mining, pension, insurance, retail. The government needs to prioritize," Nag said.

Clarity and predictability in economic policies are also needed to continue India's appeal to foreign investors.

He said that inflation in India remains high, which left little scope for easing of monetary policy and shifting the responsibility of addressing the economic troubles mostly on fiscal policy.

The ADB expects inflation to average out at seven percent and the economy to grow at the same rate in the current fiscal. (ANI)

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