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Chidambaram may address the issues related to slowdwon in the economy while some people expeced relaxation in import curbs on gold in view of the persistent demand from gem and jewellery industry.

17 Feb 2014

NEW DELHI (Commodity Online): India' Finance Minsiter P Chidambaram's last budget before the term of the ministry comes to an end is expected to have some populist measures with an eye on elections but at the same time an uneventful affair as it is an interim budget to approve expenditure for four months beyond March 31. Market expects gold import duty to be eased by 2% from the current 10% in view of success attained in containing current account deficit (CAD). (However, Chidambaram decided to maintain status quo stating that India still needs to have curbs in place to keep gold imports in check)

Chidambaram will no doubt highlight the achievements of the government in containing Current Account Deficit and fiscal deficit. The fiscal deficit is likely to have been fallen to 4.8% of the GDP or lower by postponing expenditure and advancing income. Huge dividend payout from public sector companies and windfall from spectrum allocation is expected to bring some balance to government's financila position.

Chidambaram may address the issues related to slowdwon in the economy while some people expeced relaxation in import curbs on gold in view of the persistent demand from gem and jewellery industry.

Some of the sectors expecting relief are automobilies, mining and agriculture.

All in all, Chidambaram would take this chance to go down the history as a finance minister who dared to stick to fiscal consolidation ahead of an election. Only for this reason, he is unlikely to make any populist announcements, apart from some minor ones like cut in import tax on gold, according to leading columnist Swaminathan S Anklesaria Aiyar in Economic Times.

Official figures clearly show that based on his own budget estimates for 2013-14, the country's fiscal deficit touched phenomenal Rs.5,16,390 crore during April- December, India Today reported.

Some of the recent pupulist measures could put strain on government finances including deferment of decision to hike diesel prices. The export subsidy for sugar announced due to pressure from Agriculture Minsitry is expected set the national chequer back by around Rs 1400 cr. 


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