Insurance News: Economic measures will help reduce fiscal deficit: President Pranab Mukherjee

President Pranab Mukherjee on Wednesday said measures like allowing FDI in multi-brand retail and civil aviation will help  in reducing government’s fiscal deficit and putting the economy back on high growth path.

“The government has recently unveiled several policy measures designed to put economy back on high growth trajectory,”  he said while inaugurating the Indian International Trade Fair (IITF) here.

Important among these have been the decisions to allow FDI in multi-brand retail trade and civil aviation sector and to seek  the legislative approval for increasing FDI cap in insurance and pension sectors, Mukherjee added.

“Simultaneously, measures have also been announced to keep the government subsidy burden in check, thereby bringing about reduction in the fiscal deficit. These measures should help in restoring the economy growth momentum,” the President said.

The Budget for 2012-13 pegged fiscal deficit at 5.1 per cent of GDP. However, the government has raised the fiscal deficit target to 5.3 per cent of GDP this financial year.

In September, the Cabinet Committee on Economic Affairs (CCEA) allowed 51 per cent FDI in multi-brand retail and 49 per cent investment by foreign airlines in Indian carriers.

Besides, last month the government approved a proposal to hike foreign investment ceiling in the insurance sector to 49 per cent from the present 26 per cent. Also, it allowed FDI in pension funds and said the limit could go up 49 per cent in line with the cap in insurance sector. The growth rate was 5.5 per cent in the first quarter of this fiscal. RBI has lowered the growth projection for this fiscal to 5.8 per cent in 2012-13 from 6.5 per cent estimated earlier.