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FDI in retail to curb fiscal deficit: Pranab

President Pranab Mukherjee said on Wednesday that measures like allowing foreign direct investment (FDI) in multi-brand retail and civil aviation would help in reducing the government's fiscal deficit and putting the economy back on a high growth path.

Inaugurating the India International Trade Fair (IITF) here, Mukherjee said, 'The government has recently unveiled several policy measures designed to put the economy back on a high-growth trajectory.'

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

'Simultaneously, measures have also been announced to keep the government's subsidy burden in check, thereby bringing about a reduction in the fiscal deficit. These measures should help in restoring the economy's growth momentum,' he explained.

The Union budget for financial year 2012-13 has pegged the fiscal deficit at 5.1 per cent of the gross domestic product (GDP). However, the government has raised the fiscal deficit target to 5.3 per cent of GDP this fiscal. 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 the 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 that the limit might go up 49 per cent in line with the cap in the insurance sector.

The growth rate was 5.5 per cent in the first quarter of this fiscal. The Reserve Bank of India, the country's central bank, has lowered the growth projection for 2012-13 to 5.8 per cent from the 6.5 per cent estimated earlier.
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