India committed to fiscal prudence: Chidambaram

Finance minister P Chidambaram today said India is committed to fiscal prudence and that thee government will contain deficit at 5.3 per cent of GDP in the current year, and bring it further down to 4.8 per cent in 2013-14.

He said the government is taking the first step to fiscal consolidation in order to take the economy to the path of fiscal prudence.

Yet, he said, the government has no plans to increase taxes to bridge the deficit.

"Fiscal deficit target will be met, taxes will not be raised and while policy will and should be biased towards the poor, the budget will offer a lot," he said.

Speaking at a meeting of international investors in Hong Kong as part of a four-city tour to try and boost capital flows into the country, Chidambaram allayed fears that India was in danger of losing its investment-grade credit rating and being downgraded to "junk" status.

He said the government would raise by $5 billion each the caps on foreign institutional investors holding government and corporate bonds. This was in line with market expectations, but has not yet been formally announced by the Securities Exchange Board of India.