India says good times over, warns deficit must go up
India's ruling Congress party warned Monday the good economic times were over in a pre-poll mini-budget and said the fiscal deficit would have to rise sharply to fight the global slump.
The government, whose five-year mandate expires in May, said the economy had enjoyed a "dream run" over the past few years with annual growth running at an average of close to nine percent --- "much faster than ever before."
But acting finance minister Pranab Mukherjee said the worldwide economic downturn meant there was now a need for more spending to stimulate domestic growth.
The fiscal deficit will be 6.0 percent of gross domestic product for the fiscal year to March 2009 -- more than double the government's target of 2.5 percent.
"Extraordinary economic circumstances (call for) very extraordinary measures," Mukherjee told parliament, presenting what was tantamount to a political manifesto for general elections due in April-May.
The increased spending will have to be financed through borrowings and credit rating agencies have warned that a rise in the fiscal deficit could lead to rating downgrades and deter investors from buying Indian debt.
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