The budget is just a month away. The upswing in the Indian economy has reason to make the Finance Minister upbeat. India’s foreign exchange reserves have hit an all time high of $322.14 billion. The current account balance is set to go positive and the rupee is strengthening against the dollar. The last time India registered a current account surplus was in January-March, 2007. Consumer price inflation is slipping down to around 5%. Official forex reserves shelter the rupee from speculative attack. The RBI is in a comfort zone as regards cutting interest rates. The situation has improved significantly with the rupee and deficits causing no alarm.
No doubt the turnaround in the Indian financial situation is primarily due to the fall in global crude prices. There has been about a 6% fall resulting in annual forex savings of over $80 billion for India. Low oil prices have triggered disinflation in the country. The present government must make hay while the sun shines on the hitherto languishing economy. US President Barack Obama’s visit to India has been a plus factor. The IMF has forecast that India’s growth rate will zoom past China’s in two years. The Vibrant Gujarat Summit has sent vibes in the air. If all goes well, political stability in India is more or less assured for the next few years. All this brightens India’s economic prospects. Time and again foreign investors have indicated that they are more than willing to do business with this country. The forthcoming budget should bolster national and international confidence in the Indian economy. The needs are commitment to growth, reforms, fiscal consolidation and rationalization of the tax structure.