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Committing to contain fiscal and current account deficits, Finance Minister P Chidambaram said the government would not hesitate to take difficult decisions to keep them under check.
"The government is committed to the path of fiscal consolidation and has drawn red lines for the two deficits (fiscal and current account). We shall not allow the red lines to be breached under any circumstances, and we shall remain within the red lines. We are prepared to take difficult decisions in this regard, should the need arise," he said.
Chidambaram said this during an intervention at the IMF Committee plenary meeting here on Saturday. The government proposes to bring down fiscal deficit, an indicator of government borrowing, to 4.8 per cent of the gross domestic product in 2013-14 from 4.9 per cent a year ago.
As regards the current account deficit (CAD), Chidambaram had earlier said that all efforts would be made to contain it at 3.7 per cent of GDP or $70 billion in the current financial year. The CAD, which is the difference between inflow and outflow of foreign exchange, had touched an all-time high of 4.8 per cent of GDP or $88.2 billion a year ago.
Admitting the government policies are directly responsible for the fiscal deficit and current account deficit, Chidambaram said, "necessary measures have...been initiated to contain the fiscal deficit and the current account deficit."
Going forward, he said, "the commitment is to bring down the fiscal deficit to three per cent by 2016-17."
