Prime Minister's Chief Economic adviser C Rangarajan today said the government should stick to the budgetary target of fiscal deficit at 4.6% of the GDP, even as he admitted it was a difficult target to achieve.
"The Government of India must ensure that the budgeted level of fiscal deficit (4.6%) is maintained. I know it is difficult target to achieve. The revenue target still can be achieved," Rangarajan said.
Last month, the government while increasing prices of diesel, kerosene and cooking gas withdrew 5% customs duty on crude oil. It also reduced the import duty on petrol and diesel from 7.5% to 2.5% and cut down excise duty on diesel by Rs 2.60 to Rs 2 per litre.
The move may further widen the fiscal deficit with the revenue loss, according to analysts.
Rangarajan added the fiscal deficit may come down to 3% by year 2013-14.
On the country's economic growth prospects, the Chief Economic adviser said that India was likely to grow between nine and 9.5% during the 12th five year plan (2015-17) and any targets to push the growth beyond 10% may further fuel demand-drive inflationary pressures.
"India will definitely grow between 9-9.5% during 12th plan given the macro-economic parameters. I believe if we try to grow beyond this point, it would result in inflationary pressures raising and also the current account deficit widening," Rangarajan said.