The finance minister said the government will curtail its 2013-14 fiscal deficit to 4.6 per cent of GDP, lower than the red line at 4.8 per cent he drew in the last budget. India's fiscal deficit will come down to 3 per cent of GDP by 2016-17.
India's deficit is the highest among the BRIC nations and a breach of the red line would have led to a downgrade by ratings agencies, which Indian cannot afford at a time when it is growing at the slowest pace in a decade.
The finance minister rolled over fuel subsidy worth Rs. 35,000 crore in 2014-15 to meet the deficit target.
Mr Chidambaram said the current account deficit for 2013/14 will come down to $45 billion and forex reserves will rise by $15 billion by end of 2013/14.
He raised the spending to Rs. 2.24 lakh crore in 2014/15, up 10 per cent year on year, but kept the plan expenditure for 2014/15 at the same level as previous year. The non-plan spending may rise to about Rs. 12.08 lakh crore in 2014/15.
Food, fertilizer and fuel subsidy for 2014-15 is seen at 2.46 lakh crore, slightly more than 2.45 lakh crore in 2013-14, Fuel subsidy is pegged at Rs. 65,000 crore, while food subsidy is seen at Rs. 1.15 lakh crore in 2014-15, Mr Chidambaram added.
Mr Chidambaram cut excise duty on small cars and two-wheelers from 12 per cent 8 per cent. The cut in duty will be applicable up to June 20, 2014, when the new government is likely to present the full year budget.
Mr. Chidambaram also brought down excise duty on mid and large segment cars to 20 per cent, while duty on Sports Utility Vehicles or SUVs has been brought down to 24 per cent from 30 per cent. He cut duty on consumer durables.
Mr Chidambaram's interim budget was on expected line AND THE MARKET REMAINED FLAT.Either it was treated as too good to be true or they are waiting for the FII's to come and start buying which they will.