Finance Ministry today assured India Inc that it will sooncome out with steps to contain fiscal deficit and promote investment as well asgrowth which has dipped to a nine-year low of 6.5 per cent in 2011-12.
Department of Economic Affairs Secretary Arvind Mayaram alsosaid Finance Minister P Chidambaram will meet heads of public sectorundertakings tomorrow to encourage them to move ahead with their investmentplans.
As regards the fiscal deficit Mayaram, in his address to theexecutive committee members of industry chamber Ficci, said the government"intends to take steps to correct the fiscal deficit, it will not happenin one day. Correction of fiscal deficit would also mean hardship and thathardship will have to be across the board".
Recalling the earlier statement of Chidambaram, he said, thedecisions "not only impact those who are in the middle class or lowermiddle class but it will also possibly impact those who are in the higherclasses ... I think we need to be prepared for that".
On steps to boost growth, Mayaram said Finance Minister willtake up the issue of clearance of pending projects with the Cabinet. Severallarge projects involving investments of Rs 1.5 lakh crore are being held upbecause of delay in statutory clearances.
The Minister, he said, will also take up the issue ofinvestment by nine bluechip PSUs which are sitting on a cash pile of around Rs1.8 lakh crore.
"We must also be a nation which recognises its ownstrength and to me growing at 6.5 per cent, which is amongst the highest in theworld as of today or even 6 per cent should be a cause for at least someconfidence in ourselves," Mayaram said.
Mayaram said the people should not seek lowering of taxes astaxes foregone amount to subsidy.
"... We need to look at subsidies carefully but we needto be careful of asking for foregoing of tax because that also adds to what Iwould call "subsidies" and therefore adds to the problem of fiscaldeficit," he added.
Mayaram said that achieving the 5.1 per cent fiscal deficittarget would be difficult and the government will take measures to contain thegap between overall expenditure and revenue.
"The budget has targeted (fiscal deficit at) 5.1 percent. I am not very sure we will be able to reach 5.1 per cent but I can assureyou that the government is fully seized to be somewhere very close to it andfor that whatever measure have to be taken will be taken," he said.
"We must move towards higher growth trajectory and ifthere is a blip we need to find why and try address that and then see how wecan move forward," Mayaram said.
Indian economy, after growing at over 8 per cent for twoconsecutive 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 ofmajor concern.
The senior bureaucrat said inflation needs to "betackled in a manner that we are able top give comfort to the regulator ReserveBank 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, andthe volatility has come down with better management of foreign exchangereserves.