New Delhi: The finance ministry said on Tuesday, it would prune unproductive expenditure and moderate inflation while staying focussed on fiscal consolidation.
“The government will continue to take necessary measures to moderate inflation, prune unproductive expenditure and closely monitor Fiscal Responsibility and Budget Management (FRBM) targets,” the ministry said in its third quarter review of 2008-09.
The process of fiscal consolidation, it said, was “a necessary pre-requisite for sustained growth,” and continued to be “in focus.”
The fiscal deficit upto the end of the third quarter (April-December) 2008-09 was Rs2,18,262 crore, nearly thrice of Rs77,578 crore in the previous year’s corresponding period.
The ministry said it would harmonise the need for resources for development expenditure within the fiscal discipline imposed by FRBM Act, 2003.
While the Act required fiscal deficit to be brought down to 2.5% of the Gross Domestic Product (GDP) by 2008-09, the government’s steps to stimulate the economy, impacted by the global financial downturn, soared it to 6.2% last fiscal. Even for the current fiscal, it has been pegged at 6.8% of the GDP.
The government, however, has prepared a roadmap to return to the FRBM target as soon as the negative effects of the economic crisis on India are overcome. It plans to bring down the fiscal deficit to 5.5 % of the GDP in 2010-11 and 4% in 2011-12.