Action plan to rein in high fiscal deficit soon: Mayaram
Mumbai: The Finance Ministry Thursday said it is committed to bringing down burgeoning fiscal deficit and will soon come out with an action plan to achieve this objective.
Saying the fundamental of the economy are "very strong", the newly-appointed Economic Affairs Secretary Arvind Mayaram said, "We already have a roadmap to be followed for fiscal consolidation. The finance minister has laid out the forward path very clearly and I am quite confident about (outcomes of) the action plan. Wait for a while to have the action plan to unfold".
The comments came in the backdrop of global bankers and rating agencies this week revising downward the GDP forecast for the fiscal. The latest factory output showed a surprise contraction of 1.8 percent in June against 9.5 percent a year earlier.
The latest to join the growth revision was the research arm of the global rating Moody's which today cut GDP forecast to 5.5 percent from 6 percent. Crisil, Citi and CLSA had also pegged down GDP in the range of 5.4 to 5.5 percent earlier this week.
Finance Minister P Chidambaram on August 6 unveiled a road-map to boost investment and economy by fine-tuning policies to put in place a stable and non-adversarial tax regime, a possible cut in interest rates and measures to attract domestic savings and foreign capital.
On fiscal consolidation, Chidambaram had said that he has asked noted experts Vijay Kelkar, Indira Rajaraman and Sanjiv Misra to assist "the government in formulating the path of fiscal consolidation and we expect that the work will be completed in a few weeks".
The Government would soon unveil the path, the Finance Minster had said, "The burden of fiscal correction must be shared, fairly and equitable, by different classes of stakeholders... Adjustments must be made both on the revenue side and the expenditure side," Chidamabaram had said.
The government has budgeted 5.1 percent of fiscal deficit for 2012-13. Till July end, the budget deficit has already touched 37 percent of the budgeted amount.
Admitting that the deepening crisis in the global economy is posing challenges to the domestic economy, Mayaram said, "The global economic headwinds and fiscal deficit are threats to our growth?"
Mayaram, who is also the government nominee on the board of the Reserve Bank, was talking to reporters after a meeting of the board of the central bank here today.
The fiscal deficit had touched a high of 5.9 percent last fiscal against a budget target of 4.6 percent.
"We are committed to move in that direction (achieving fiscal consolidation). (Because the) fundamentals of the economy are very strong and therefore we do believe that we have the required resilience to overcome these constraints," Mayaram said.