The fiscal deficit for the financial year 2013-14 will be contained at 4.6 per cent of GDP. Stating this in his Interim Budget speech for the financial year 2014-15, the Finance Minister, Shri P. Chidambaram, said that the Current Account Deficit (CAD), that threatened to exceed last year’s CAD of USD 88 billion, will be contained at USD 45 billion. The Finance Minister further stated that about USD 15 billion is expected to be added to the foreign exchange reserves by the end of the financial year 2013-14.

Shri Chidambaram said that due to the efforts of both the Government and the RBI, the WPI inflation stood 5.05 per cent at the end of January 2014 where as the core inflation was 3.01 per cent. This is lower than the WPI inflation figure of 7.3 per cent and core inflation of 4.2 per cent for the same period last year. The Finance Minister admitted that the food inflation continues to be a matter of concern although it has declined sharply from a high of 13.6 per cent to 6.2 per cent.

Fiscal deficit containment aims to restore macroeconomic stability while managing current account pressures and inflation. Fiscal deficit targeted at 4.6 per cent of GDP for 2013-14 as the central fiscal policy objective, framed within an integrated stabilization strategy. The Interim Budget links this fiscal target to an aim of containing the current account deficit at a substantially lower level than the prior year and to an expected accumulation of foreign exchange reserves by year end. It reports lower wholesale price and core inflation compared with the previous year while identifying food inflation as a continuing concern, attributing improved inflation outcomes to coordinated Government and central bank efforts.