Aiming for fiscal deficit of 5.3% or lower: Chidambaram

Finance Minister P Chidambaram said he plans to unveil a path to credible and feasible fiscal consolidation, after a government panel warned the country was on the edge of a fiscal precipice because of high subsidies. The panel in September said India should urgently slash fuel, food and fertilizer subsidies to curb a budget deficit that could hit 6.1 percent of gross domestic product this fiscal year.

Chidambaram said the government is aiming for fiscal deficit of 5.3% or lower for the current fiscal year. He said India has been above 7% for six out of last eight years and there is no reason for despondency despite growth weakness. However, he acknowledged that the slowdown is a matter of concern adding, India is not immune to global developments. Chidambaram said global problems, high inflation and declining investments were responsible for slow growth. He said that the Reserve Bank's tight money policy dampened growth and investments. “We need to take more steps to contain inflation,” he told reporters, adding it has been a persistent concern for the last few year. The country's economic growth is likely to accelerate from the current level of 5.5 percent for the remaining quarters of the fiscal year, Chidambaram said. India's quarterly GDP grew 5.5 percent, driven by a rebound in construction and financial services, provisional government data showed in August, just above the 5.3 percent posted in the three months ended in March. "We should aim at 8-9 percent economic growth," and this he said can be achieved if the savings go back to 36-37% levels. He said that without reforms the economy would be at risk and it would not be possible to create enough jobs. The finance minister said that fiscal and monetary policy must act in tandem to promote growth.
He said that without reforms the economy would be at risk and it would not be possible to create enough jobs. The finance minister said that fiscal and monetary policy must act in tandem to promote growth. Chidambaram said that the disinvestment of Rashtriya Ispat Nigam Limited would happen by the end of October. Speaking on the DLF-Robert Vadra controversy, he said that unless there was specific allegation of quid pro quo, the government could not probe private deals. He said that the government would not wait for the Budget to take action on the Shome panel report on retrospective tax amendment. With inputs from agencies
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