Expressing India’s commitment to fiscal prudence, finance minister P Chidambaram on Tuesday said the government will contain deficit at 5.3 per cent of GDP in the current year, and bring it down to 4.8 per cent in 2013-14. “The first step is fiscal consolidation and (India is) committed to the path of fiscal prudence. At the end of this year we will achieve the target of 5.3 per cent of fiscal deficit and next year I will budget it no more than 4.8 per cent," he told PTI here. Chidambaram said the government is committed to lowering the fiscal deficit by 0.6 per cent every year for the next five years. “Under no circumstances will I agree to bridge the fiscal target of 5.3 per cent (in current fiscal)," he said. Rising expenditure on subsidies has put pressure on government finances. This has prompted the government to raise the fiscal deficit target for the current fiscal to 5.3 per cent, from 5.1 per cent announced in budget. Chidambaram said the fiscal correction measures that the government has undertaken in the recent months will help avert the threat of a ratings downgrade. Ratings agency Standard & Poor's and Fitch have threatened a downgrade of India's sovereign ratings. “I think the steps we have taken assured everybody that there will not be a rating downgrade. They were concerned about our ability to stay on course after we announced the decisions. They are happy we stayed on course after announcing FDI in multi-brand retail. “They were concerned that we will not correct fuel prices. But even the small steps we gave taken gas given them confidence that we will correct the fuel prices. I think each of the measures has boosted their confidence in the Indian economy," he said. The government has taken a host of steps to contain the outgo on subsidies, including limiting the number of subsidised LPG cylinders to 9 per family a year and partial deregulation of diesel prices. Source: Mydigitalfc
