India economy seen to pick up speed

India’s economy is expected to pick up speed, inflation will fall and the fiscal deficit will be reined in during the next financial year, an official forecast published by the finance ministry. The upbeat projection, prepared by the finance ministry, predicts Asia’s third-largest economy will expand by 6.1 to 6.7% in the next financial year to March 2014 after growing by an estimated five percent this year, which marks a decade-low. But the report says the government must keep up economic reforms to reignite investor confidence in the economy which has slowed sharply from expansion of 9.3 percent just two years ago in the financial year 2010-11.

Market expectations are high that Finance Minister P. Chidambaram, known as an ardent reformer, will seek to restore investor confidence in India’s unravelling public finances by opting for fiscal prudence over populism in the budget. The Congress-led government has introduced a string of measures since last September to encourage foreign investment in key sectors and reduce subsidies, which have led to a ballooning fiscal deficit.