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India economy strong,fiscal deficit worrying-Sinha

AHMEDABAD: Indian Finance Minister Yashwant Sinha said on Sunday the economy was sound although the fiscal deficit remained a concern.

"The overall health of the economy, except for fiscal deficit, is absolutely robust," Sinha told Reuters in the western city of Ahmedabad where he was attending a function.

"In the medium term we will make efforts to reduce the fiscal deficit further," Sinha said.

India's fiscal deficit for 1999/2000 (April-March) is estimated at 5.6 percent of gross domestic product, sharply up from 4.5 percent the previous year. It is seen at 5.1 percent for 2000/01.

Sinha said a fiscal deficit was nothing new.

"It has been a matter of concern for two decades. We have lived with fiscal deficit in this country since the beginning of 1980s. It is not a problem that has come up suddenly," he said.

Sinha expressed confidence over the health of the economy and said seven to eight percent economic growth was possible in the current financial year which ends on March 31.

"I have stated in my budget that we are targeting a growth rate of seven to eight percent this year and we will be able to achieve it," he said.

"We will be able to sustain the same rate during the next year also," he said.

CONCERN OVER NATIONAL CONSENSUS

However, Sinha said national consensus on economic reforms was weakening.

"We have to strengthen it and there is a great deal of consensus among the NDA (National Democratic Alliance) partners on that," he said.

Sinha faced opposition from regional allies of the Bharatiya Janata Party within the NDA to some of his budget proposals on reducing subsidies on fertilisers and foodgrains.

Other budget proposals on reducing government holdings in state-owned banks and public sector firms to a minority status have drawn fire from leftist parties and organised labour.

But Sinha was confident the weakening consensus would not affect his divestment programme, in which he plans to raise 100 billion rupees in 2000/01 through sales of government stakes in public sector firms.

CLINTON VISIT TO BOOST BILATERAL TRADE

Sinha also said India and the United States would benefit from President Bill Clinton's visit last week.

"In the coming days we will see the benefits of the institutional arrangements made between the two countries," he said.

U.S. companies signed projects worth some $4.0 billion during Clinton's vist -- the first by a U.S. President to India in 22 years. The U.S. Export-Import Bank will make available some $1 billion to small and medium-sized businesses in India.-Reuters