Despite attempts by the government, the government is still grappling with a slow growth and a much wider fiscal deficit. Montek Singh Ahluwalia, Chairman of planning commission is worried that FY13 fiscal gap is likely to be higher than the target set in the Budget.
Batting for the RBI’s move to cut cash reserve ratio (CRR) by 25 basis points (bps), Ahluwalia says that it is much better move than cutting repo rate. “Repo rate revision does not impact short-term lending rate,” he adds.
He is in favour of cutting non-plan expenditure by finance ministry.
Ahluwalia adds that there should not be any roll back on LPG or diesel hike as keeping subsidy below 2% is also important. “We need to address debts of state distribution companies and focus on planned expenditure,” he says.