Rating agency Fitch yesterday expressed apprehension that the poor performance of the Congress in the recent assembly elections could push up the Centre's fiscal deficit as there may be an "increased likelihood of political pressure to limit expenditure cut-backs."
The setback faced by the Congress in the state elections, it added, "could potentially raise political pressure on the government's near-term fiscal goals."
The Congress was defeated in the elections held in Madhya Pradesh, Chhattisgarh, Rajasthan and Delhi. The government has set a fiscal deficit target of 4.8% of GDP for the current financial year. Chidambaram has asserted several times that the red line of 4.8% of GDP for the fiscal deficit will not be breached. Addressing the Conclave, the finance minister said India would also need to focus on the revenue deficit to ensure that borrowings were not used for consumption.