Finance Ministry today assured India Inc that it will soon come out with steps to contain fiscal deficit and promote investment as well as growth which has dipped to a nine-year low of 6.5 per cent in 2011-12.
Department of Economic Affairs Secretary Arvind Mayaram also said Finance Minister P Chidambaram will meet heads of public sector undertakings tomorrow to encourage them to move ahead with their investment plans.
As regards the fiscal deficit Mayaram, in his address to the executive committee members of industry chamber Ficci, said the government "intends to take steps to correct the fiscal deficit, it will not happen in one day. Correction of fiscal deficit would also mean hardship and that hardship will have to be across the board".
Recalling the earlier statement of Chidambaram, he said, the decisions "not only impact those who are in the middle class or lower middle class but it will also possibly impact those who are in the higher classes ... I think we need to be prepared for that".
On steps to boost growth, Mayaram said Finance Minister will take up the issue of clearance of pending projects with the Cabinet. Several large projects involving investments of Rs 1.5 lakh crore are being held up because of delay in statutory clearances.
The Minister, he said, will also take up the issue of investment by nine bluechip PSUs which are sitting on a cash pile of around Rs 1.8 lakh crore.
"We must also be a nation which recognises its own strength and to me growing at 6.5 per cent, which is amongst the highest in the world as of today or even 6 per cent should be a cause for at least some confidence in ourselves," Mayaram said.
Mayaram said the people should not seek lowering of taxes as taxes foregone amount to subsidy.
"... We need to look at subsidies carefully but we need to be careful of asking for foregoing of tax because that also adds to what I would call "subsidies" and therefore adds to the problem of fiscal deficit," he added.
Mayaram said that achieving the 5.1 per cent fiscal deficit target would be difficult and the government will take measures to contain the gap between overall expenditure and revenue.
"The budget has targeted (fiscal deficit at) 5.1 per cent. I am not very sure we will be able to reach 5.1 per cent but I can assure you that the government is fully seized to be somewhere very close to it and for that whatever measure have to be taken will be taken," he said.
"We must move towards higher growth trajectory and if there is a blip we need to find why and try address that and then see how we can move forward," Mayaram said.
Indian economy, after growing at over 8 per cent for two consecutive years, slowed to a nine-year low of 6.5 per cent in 2011-12.
He said inflation is high and food inflation is a cause of major concern.
The senior bureaucrat said inflation needs to "be tackled in a manner that we are able top give comfort to the regulator Reserve Bank that it is time for them to have a re look at the monetary policy".
He said exchange rate which has been a cause of concern, and the volatility has come down with better management of foreign exchange reserves.