India's economy has survived drought and hard times

The country's deficit will not overshoot expectations, because the outlook for growth is strong, chief economic advisor Ashok Lahiri argued.

"All the parameters are sound, with exports going up, balance of payments improving, forex reserves at over $83bn, drought and global slowdown behind us," said finance secretary DC Gupta.

"Today's position is such that we can definitely achieve targets."

Pros and cons

The comments were in reaction to a mixed report from the World Bank, which praised Indian economic progress while warning that fiscal reform was needed to avoid slowing economic growth.

Finance Minister Singh: 'Things have never been better'

India's poverty-reduction targets are based on earlier forecasts of continuing strong growth.

But a severe drought has slowed the pace of growth in recent months, and the Bank was concerned that lavish budgetary plans threatened to make the position worse.

According to some critics, the government is now focused on next year's general elections, to the exclusion of economic prudence.

'On target'

Ripostes from the two officials complement the views of Finance Minister Jaswant Singh, who recently argued that "economic conditions in India were never as good as those prevailing now."

They argue that, far from recklessly boosting spending in view of the 2004 elections, the government was being prudently optimistic.

"Last [year]... the country was hit by a severe drought and a global slowdown. Despite this, we did not overshoot fiscal targets," Mr Lahiri said.

"In fact, the fiscal marksmanship, in terms of meeting budget targets, has never been better."