New Delhi: The government will endeavour to maximise revenue collection and contain expenditure to restrict fiscal deficit to 5.3 percent of the Gross Domestic Product (GDP) in the current financial year, Finance Minister P Chidambaram has said.
"Best efforts would be made to contain fiscal deficit at 5.3 percent, during the current financial year even though the Kelkar Committee has stated that as per the current economic trends, it could be 6.1 percent," he said yesterday while addressing the Consultative Committee attached to his Ministry on 'Economic Impact of Internal and External Debt'.
According to the Minister, "the target of 5.3 percent is challenging one, yet it is doable".
Although the government in the Budget had proposed to bring down fiscal deficit in 2012-13 to 5.1 percent from 5.8 percent in the previous financial year, it is expected to shoot up on account of various global and domestic factors.
The strategy to achieve the target would be to maximise revenue collections and control expenditure, Chidambaram said, while seeking support of the political parties to deal with economic and financial problems facing the country.
"No country can live beyond its means", he said, adding that it was imperative to ensure that country's debt remains sustainable and within limits.
The countries which have accumulated un-sustainable levels of debt are facing economic and financial problems, he added.
The Minister further said that serious efforts would also be made to bridge the Current Account Deficit (CAD) estimated at USD 70.3 billion by encouraging flow of Foreign Direct Investment and Foreign Institutional Investment.
"FDI is not an option, but an imperative, failing which we will have to rely on borrowings to meet the current account deficit", Chidambaram said, while seeking support of members of all the political parties in strengthening the government's efforts to contain both the fiscal deficit and the current account deficit.
The members on their part suggested that the government should keep in mind the interest of 'aam admai' while pursuing strategies to deal with the problem of ballooning deficit.
Some members suggested that government should develop a mechanism to plug leakages in delivery of subsidies to the needy people and poor farmers.
Many members underlined the need for a review of the functioning of various Central Sponsored Schemes (CSS) which have have failed to benefit the needy.
Members of Parliament who attended the meeting include Narahari Mahato, Rajkumari Ratna Singh, Anto Anthony, S P Y Reddy, Neeraj Shekhar, Arvind Kumar Chaudhary, Prabhatsinh Chauhan (all Lok Sabha), Shantaram Naik, Rajeev Chandrasekhar, Amar Singh, Rajkumar Dhoot, N K Singh, E M Sundarsana Natchiappan, Sabir Ali and Iswarlal Jain (all Rajya Sabha).
Meanwhile, Chief Economic Advisor Raghuram Rajan told reporters that Finance Ministry would work out strategy to restrict fiscal deficit to 5.3 percent of the GDP in the current financial year.
"The details will be worked out. But clearly behind the projection (of restricting fiscal deficit) which the finance ministry has made, there has been some thought," he said after meeting Planning Commission Deputy Chairman Montek Singh Ahluwalia Wednesday.
Rajan is believed to have discussed the macro-economic situation and global developments with Ahluwalia.
The government, he added, would over the time, work out various measures necessary for raising revenue and limiting expenditure to bridge the fiscal deficit.