No compromise on fiscal consolidation, says Chidambaram

New Delhi – Brushing aside apprehensions expressed by a rating agency, Finance Minister P Chidambaram on Wednesday said the government will stick to the path of fiscal consolidation and endeavour to narrow the deficit to 3 percent of gross domestic product by 2016-17.

“The agenda (is) obvious. At the top of the list is fiscal consolidation. There can be no compromise — and I speak for the government — there will be no compromise on the decision to walk on the path of fiscal prudence and contain the fiscal deficit step by step, year by year, until we reach the goal of 3 per cent of GDP in 2016-17,” he said.

Chidambaram spoke while inaugurating the Delhi Economic Conclave 2013 on ‘The Agenda for the Next Five Years.’

Rating agency Fitch yesterday expressed apprehension that the poor performance of the Congress in the recent assembly elections could push up the Centre’s fiscal deficit as there may be an “increased likelihood of political pressure to limit expenditure cut-backs.”

The setback faced by the Congress in the state elections, it added, “could potentially raise political pressure on the government’s near-term fiscal goals.”

The Congress was defeated in the elections held in Madhya Pradesh, Chhattisgarh, Rajasthan and Delhi.

The government has set a fiscal deficit target of 4.8 per cent of GDP for the current financial year.

Chidambaram has asserted several times that the red line of 4.8 per cent of GDP for the fiscal deficit will not be breached.

Addressing the Conclave, the Finance Minister said India would also need to focus on the revenue deficit to ensure that borrowings were not used for consumption.