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‘Will tighten belt but with care’

business Updated: Jun 02, 2010 01:13 IST
Prime Minister Manmohan Singh

A day after Indian economy reported a robust growth of 7.4 per cent for 2009-10, Prime Minister Manmohan Singh called for a “return to the path of fiscal prudence.”

Speaking at a function to mark his completion of one year in office in his second term, Singh called for a “calibrated reduction of fiscal deficit,” indicating a tightening of government expenditure.

The current budget has a deficit of Rs 3.45 lakh crore —5.5 percent of the Gross Domestic Product (GDP) — which is fairly high, though significantly lower than the 6.6 per cent level of the year before, when the government announced a slew of measures to counter the global economic downturn. "Our economy is emerging from an exceptionally difficult and challenging period where we had to face an unprecedented global financial crisis and also a severe drought," Singh said.

But the prime minister was also quick to add that social sector spending would not suffer. “Funds will not be a constraint when it comes to the core concerns of the aam admi,” the PM said in the presence of Sonia Gandhi, chairperson of the ruling
United Progressive Alliance (UPA) and the National Advisory Council NAC).

Newly appointed members of the NAC have already called for increase in government’s welfare allocations, particularly food security.

The PM also identified price rise as a major problem and promised to take “corrective steps to rein in inflation.”