Finance Minister P Chidambaram on Wednesday said wasteful expenditure must be cut to promote investment in infrastructure sector.
"If we are able to compress fiscal deficit, we will create space for investment in infrastructure sector," he told reporters on the sidelines of a CII workshop.
The space has been previously "encroached by inefficient, outdated, rent-seeking and wasteful programmes" financed through fiscal deficit, he said.
There was no room for wasteful and high-sounding programmes through public funding, he said while expressing his commitment to meet fiscal deficit targets.
"We must resist temptation to follow the route of fiscal deficit for funding projects. However, we will not follow the example countries like Australia and New Zealand which have opted for zero per cent fiscal deficit," he said, adding the government would allow fiscal deficit up to three per cent of GDP to meet investment targets.
Claiming public-private-partnership (PPP) could play a crucial role in infrastructure sector, Chidambaram said PPP was an attempt to merge the private sector skills of project execution and public sector's emphasis on public interest.
While ruling out the option to impose user charges in rural areas for drinking water and sanitation, he said in metros and large cities user charges could be imposed to meet partial costs.