High fiscal deficit can’t be sustained for long: Pranab

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London: Finance minister Pranab Mukherjee on Monday said India will revert to the path of fiscal consolidation as the high fiscal deficit cannot be sustained in the long run. He also expressed hope that the economy will grow by over 7% in the next fiscal. Prime Minister Manmohan Singh had shared with industry leaders in New Delhi on Sunday, his government’s intent to wind down stimulus measures next year.

Mukherjee said that he had already told Parliament that a high fiscal deficit was not sustainable in the long run.

India’s fiscal deficit is projected to be 6.8% of GDP this fiscal, consequent to duty sops given last year to the industry to insulate it from the effects of the global economic crisis. Mukherjee said efforts would be made to reduce fiscal deficit to 4% of the GDP and revenue deficit to 1.5% by 2012.

“In the next year, we will have growth projection of more than 7%,” Mukherjee told reporters after G-20 finance ministers meeting in Scotland.

On the impact of monsoon, the finance minister said the country had enough buffer stock of wheat and rice and the country is also importing essential items to supplement domestic supply. “On the whole, the food scenario appears to be bright,” he said.

Referring to the purchase of 200 tonne of gold by RBI from IMF, Mukherjee said India has a forex reserve of $285 billion and “We have spent $6.5 billion to buy the precious metal”. In 1991, we pledged our gold, now the situation is reversed,” he said, pointing out that the purchase of gold will not have any impact on the rupee value.

Replying to queries on British Prime Minister Gordon Brown’s proposal at G-20 meeting for Tobin tax on financial transactions, he said,” We have yet to get full details of the proposal.” Earlier, Brown had called on the G20 to consider a tax on financial transactions to make banks more accountable to society.

Talking about the issues of climate change, Mukherjee said they would be discussed at the Copenhagen summit in detail and stressed that developing countries will have to contribute to the efforts which may need about $80 billion by the year 2030.

On the Cabinet’s recent decisions on disinvestment, he said the timing for offloading of government stake in PSUs would depend on market conditions.