Chidambaram hopes to contain fiscal deficit at 3 per cent by 2017

Finance minister P Chidambaram today unveiled a roadmap for fiscal consolidation over the 12th Plan period, by bringing down the country's fiscal deficit from around 5.8 per cent of gross domestic product (GDP) at present to 3.0 per cent of GDP at the end of fiscal 2016-17.

The finance minister hopes to achieve this by a set of measures aimed at reducing expenditure and inflation along with policies aimed at increasing revenue and investments.

Towards this, he said the government would rely on the recommendations of the Vijay Kelkar Committee on resource mobilisation to a great extent.

He said the fiscal deficit at the end of the year was at 5.8 per cent of GDP.  Without immediate corrective steps, the economy may go into a cycle of low growth, high inflation and high deficit, a position which is unacceptable, given the need to generate jobs and incomes for a large population, most of whom are young.

He said the government had to take some difficult decisions in order to put the Indian economy back on the high-growth path. He said despite the additional burden that decisions like reducing fuel subsidy would bring on certain sections of the populations, people have, by and large, understood the imperative need for such difficult decisions.

The Kelkar Committee, he said, has cautioned that a business-as-usual scenario for the current year may lead to the fiscal deficit rising to 6.1 per cent of GDP.  This would have grave consequences for the economy and is, therefore, totally unacceptable.  The committee has recommended a number of reform measures in taxation, disinvestment and expenditure, he said.