While conceding that difficult decisions in the past to contain the fiscal deficit have caused some pain, finance minister P Chidambaram on Thursday said the government needs to continue efforts to contain the twin deficits and would take further measures to control gold imports.
“Some measures may cause immediate pain but this was necessary to ensure that the fiscal deficit came down to 3 per cent in the next three years. Steps were also being taken to contain the Current Account Deficit,” Chidambaram said at the NDC meeting.
The government in the recent past had hiked diesel prices by over Rs 5 per litre and capped the number of subsidised LPG cylinders to six per family in a year.
Gold imports which contributed $64 billion to the widening CAD will also have to be curbed, the minister warned. India’s CAD is expected to touch 3.5 per cent of the GDP in the current fiscal. Chidambaram also lauded state governments for containing the fiscal deficit to 2.1 per cent of the GDP.