Fiscal deficit will be below 4.8% in FY'14: Chidambaram

Finance mnister P Chidambaram today assured the investors that he has drawn red lines and the fiscal deficit will be below the 4.8% mark in 2013-14.

Finance mnister P Chidambaram Wednesday assured the investors that he has drawn red lines and the fiscal deficit will be below the 4.8% mark in 2013-14.

"A number of measures have been taken...We are determined to go back to the path of fiscal consolidation...We have laid out a new path and I have said these are red lines. This will be never, never breached," he said while addressing India Summit organised by UK-based magazine The Economist.

"Going forward in 2013-14, fiscal deficit will be contained below 4.8% of the GDP", he said.

Chidambaram had gone the whole hog to contain the fiscal deficit by compressing expenditure and making extra efforts to improve revenue collection.

As a result, the Government has been able to hold the fiscal deficit -- the gap between expenditure and revenue --at 5.2% of the GDP in the last fiscal as against the revised Budget estimates of 5.3%.

After taking over the Finance portfolio in August last year, Chidambaram had unveiled a roadmap for fiscal consolidation to bring the fiscal deficit at the level of 3% by 2016-17.

However, Chidambaram said that more important than controlling the fiscal deficit was to check the widening Current Account Deficit (CAD).

Referring to the three tranches of fiscal stimulus that was given to the industry to cushion it against the impact of global slowdown of 2008, Chidambaram said the third instalment was "perhaps avoidable".

The stimulus packages amounted to Rs 1.84 lakh crore or 3% of GDP. Although the fiscal measures help the economy grow at over 8%, it resulted in higher fiscal deficit as well as inflation.