Finance Minister P. Chidambaram, on Tuesday, asserted that the government would strive to maximise revenue collection and contain spending to contain the fiscal deficit to 5.3 per cent of the GDP (gross domestic product) in the current fiscal year.
“Best efforts would be made to contain the fiscal deficit at 5.3 per cent [of the GDP] during the current financial year even though the Kelkar Committee has stated that, as per the current economic trends, it could be 6.1 per cent,” Mr. Chidambaram said here while addressing the consultative committee attached to his Ministry on 'Economic impact of internal and external debt'. “Though the [fiscal deficit] target of 5.3 per cent is [a] challenging one, yet it is doable,” he said.
Towards achieving the fiscal deficit target, Mr. Chidambaram sought the support of all political parties to deal with economic and financial problems facing the country, and pointed out that it was imperative to ensure that country's debt remained sustainable and within limits. As for the current account deficit (CAD), the Finance Minister said that “serious efforts” be made to bridge the gap which now stood at $70.3 billion, and this would be done by relying mainly on inflows through three major heads — foreign direct investment (FDI), foreign institutional investment (FII) and external commercial borrowings (ECBs).
Participating in the discussion, members suggested that while following the path of fiscal consolidation, the interests of the common man (aam admi) should not be compromised. Some members, while suggesting continuation of various subsidies, including fertilizer subsidy for farmers, noted that the government could adopt an efficient mechanism to plug leakages in delivery of such assistance to the needy people and poor farmers.
Many members felt that there was a need to review the functioning of various Centrally-sponsored schemes (CSS), which are not able to deliver the benefits. Mr. Chidambaram said that his Ministry was in favour of fewer CSS with larger amount so that the desired objectives and targets were achieved.
Meanwhile, after meeting Planning Commission Deputy Chairman Montek Singh Ahluwalia, Chief Economic Advisor Raghuram Rajan told journalists that the Finance Ministry would be working out a strategy to contain the fiscal deficit to 5.3 per cent of the GDP this fiscal. “The details will be worked out. But clearly, behind the projection [of containing the fiscal deficit] which the Finance Ministry has made, there has been some thought,” Dr. Rajan said.
