New Delhi: After announcing a stimulus package and mulling further steps to boost the economy, Home Minister P Chidambaram today said fiscal deficit even beyond 3% is not a matter of concern.
“If fiscal deficit crosses 3% of the GDP it is not a cause for concern. We had brought down the fiscal deficit to 2.5% from 4.5%,” Chidambaram, who is assisting Prime Minister Manmohan Singh in the Finance Ministry after being recently shifted to Home Ministry, said replying to supplementaries in the Lok Sabha.
He said that it would not be wise to amend the Fiscal Responsibility and Budget Management (FRBM) Act.
CPI(M) member Rupchand Pal had suggested amending the FRBM Act in the wake of the global meltdown.
“This is not a wise suggestion. The FRBM Act has brought about a great deal of discipline in government expenditure,” said Chidambaram, who has been answering questions related to Finance Ministry in Parliament.
He said the government would inform the House if the FRBM targets are breached.
Chidambaram’s assertion came in the face of declining tax revenue on account of slackening growth as also cut in the excise rates.
Government had last week cut the excise duty across the board from 12% to 8%.
In reply to a query, he said India’s external debt as a proportion to the GDP is 18.9%, the lowest among 57 large economies of the world.
Minister of State for Finance P K Bansal said that the Indian economy was in a “comfortable situation” despite the global meltdown. “We have weathered the storm. There is no cause for worry,” he said.