The government is concerned about controlling the fiscal deficit and is committed to the fiscal deficit target of 4.6% of GDP this year, said C Rangarajan, chairman, Prime Minister’s Economic Advisory Council (PMEAC). He hinted at a need for deregulation of diesel prices to meet the target.
“Some action is called for (on the fuel price) to control subsidy at budget level,” said Rangarajan.
“In the medium term, farm economy and the power sector will pose a major challenge,” said Rangarajan. “Necessary steps must be taken to revitalise traditional crop culture. A more aggressive path of capacity creation (power) must start immediately.”
The 8.5% GDP (gross domestic product) growth rate is achievable in the current fiscal year but certain constraints need to be removed to sustain the 9% growth rate, he said.
The economy should be able to grow at 9-9.5% during the 12 Plan Period on the back of the investment rate touching 38% of the GDP, Rangarajan said.