Finance Minister Pranab Mukherjee has said that India will not be able to sustain high fiscal deficit in the long run, but he did not give any timeframe for withdrawing the stimulus measures that inflated the deficit.
As Prime Minister Manmohan Singh shared with industry leaders in New Delhi on Sunday, his government's intent to wind down stimulus measures next year, Mukherjee told reporters in St.Andrews, Scotland, that he had already told Parliament high fiscal deficit was not sustainable in the long run.
India's fiscal deficit is projected to be 6.8 per cent 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 four per cent of the GDP and revenue deficit to 1.5 per cent by 2012.
Echoing the sentiments expressed by the Prime Minister, he said that the economy would grow by more than seven per cent next fiscal. "In the next year, we will have growth projection of more than seven per cent," he told reporters yesterday evening after a G-20 Finance Ministers meeting.
With regard to the current fiscal, he said the country was likely to register an economic expansion of 6.5 per cent, less than the 6.7 per cent recorded in 2008-09.