New Delhi: Finance Minister P Chidambaram said on Tuesday the government was on track to meet its fiscal target of 3 per cent of gross domestic product by 2008/09, a measure watched by rating agencies.
India has set a fiscal deficit target of 3.8 per cent for the year to March 2007 and policymakers say it would be met. Standard and poor's has kept its India rating just below investment grade, citing the fiscal deficit as the biggest obstacle for India to achieving double-digit growth needed to wipe out mass poverty.
"Our goals have been set very clearly. By 2008/09 fiscal deficit must be brought down to 3.0 per cent and the revenue deficit must be wiped out," Chidambaram told the Upper House of Parliament.
"That is a goal which every government has agreed in the last 6 to 7 years and we are marching towards that goal. As of now I believe we are on track." He also said the country's debt burden was sustainable.
State governments were also strictly adhering to fiscal correction, which had helped in lowering the consolidated deficit, he said. The combined deficit of the state and federal governments, which was nearly 10 per cent in 2001/02, was at 7.7 per cent of gross domestic product in the past fiscal year that ended on March 31, lower than the 8.4 per cent in 2004/05.
The finance minister said the country's debt level was sustainable and the economy would continue to post strong growth. "We have the capacity to service this debt and I think our economy will continue to grow at a rapid pace," Chidambaram added.
The economy has expanded at an average of 8 per cent in the past three years on strong demand and the Reserve Bank of India expects growth 7.5-8.0 per cent in the fiscal year ending March 2007.
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