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India unveils restrained pre-election budget

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KAY JOHNSON | February 17, 2014 04:31 AM EST | AP

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MUMBAI, India (AP) — India's finance minister unveiled Monday a restrained mini budget for the government's remaining months in office, saying the fiscal deficit has narrowed and pledging to keep public spending steady.

Palaniappan Chidambaram said that the Indian government's finances are in better shape than a year ago, with a projected budget deficit of 4.6 percent of gross domestic product for the financial year ending March 31, lower than the target of 4.8 percent.

India's elections are due by the end of May.

The finance minister said higher duties on gold imports have helped narrow the country's current account deficit by almost half to a projected $45 billion by the end of March.

Chidambaram outlined a budget of 5.6 trillion rupees ($90.4 billion) for the April- June quarter, which included a 10 percent increase in defense spending.

Total government subsidies in areas such as food and fuel would remain steady, allaying lingering fears the ruling Congress party-led government would splash out on populist giveaways ahead of elections. However, the current subsidies include a $20 billion program to subsidize wheat, rice and cereals for some 800 million people approved last year.

Asia's third-largest economy was also starting to grow faster, Chidambaram said, predicting third and fourth quarter growth of 5.2 percent. After years of economic expansion averaging 8 percent, India has sputtered in the past year, with growth sinking to a decade low of 4.5 percent in the April-June quarter of 2013. June.