Chidambaram pitches for fiscal consolidation to contain deficit

Finance Minister P Chidambaram on Thursday in his reply to the Budget in the Lok Sabha expressed grave concern at the swelling fiscal deficit (5.3% of the GDP) and stated that if the government fails to rein in fiscal deficit there would be serious consequences which would spell disaster for the nation and adopting the path of fiscal consolidation would lead to lowering of fiscal deficit to acceptable level.

“At present fiscal deficit is at 5.3% through the path of fiscal consolidation we will lower it to 4.8% of GDP in 2013-14. If fiscal deficit continues it will have grave consequences and lead to high inflation.”

Chidambaram asked the House and the nation to have faith and assured that the country will yet again go back to growth trajectory of above 7 per cent as was seen in the last two years.

“In the life of a nation there are times when the economy tends to falter, because of the global crisis even developed nations including US, Japan and Canada were growing merely between 2 per cent and 2.3 per cent.” “Five per cent growth rate should not demoralize us. We will achieve 6 per cent growth this fiscal and next year go back to 8% and above,” the Finance Minister assured the nation smarting under high fiscal deficit and high inflation.

The finance minister pointed out that India oil import bill was $150 billion which is very high and was one of the prime reason for high fiscal deficit.

 “We have carved out a fiscal consolidation map and we will see to it that the fiscal deficit is brought down or else it will lead to disaster.”

He said earlier to keep the fiscal deficit at acceptable level the government had resorted to market borrowings that eventually led to high fiscal deficit and high inflation. He said the government through a series of measures is working towards fiscal consolidation.

He said the government was working towards managing the macro economy and added that the other key areas of government would be to financial inclusion and empowering women.

“The national women’s bank is a step in that direction,” Chidambaram said.

As finance minister of the nation Chidambaram  promised the passage of the Food Security Bill and assured that his ministry would provide funds necessary for the Bill which ensures food for all.