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Allaying fears of a spurt in public expenditure ahead of Lok Sabha polls, Finance Minister P Chidambaram today said government will not compromise on fiscal discipline, notwithstanding the defeat of Congress in four states, including Delhi and Rajasthan.
Inaugurating the Delhi Economic Conclave, Chidambaram blamed the states for "inaction" to check hoarding and said the incumbent government pays a price for high inflation.
"The agenda, therefore, will be obvious. At the top of the list is fiscal consolidation. There can be no compromise -- and I speak for the government when I say there will be no compromise -- on the decision to walk on the path of fiscal prudence and contain the fiscal deficit, step by step, year by year, until we reach the goal of 3 percent of GDP in 2016-17," he said.
For the current financial year, the government has set a fiscal deficit target of 4.8 per cent.
His remarks come a day after global rating agency Fitch suggested that the poor performance of Congress in the just-concluded assembly elections could push up the Centre's fiscal deficit as there may be an "increased likelihood of political pressure to limit expenditure cut-backs".
The setback faced by the Congress in state elections, Fitch added, "could potentially raise political pressure on the government's near-term fiscal goals".
The Congress was defeated in the elections held in Madhya Pradesh, Chhattisgarh, Rajasthan and Delhi. Congress was the ruling party in Rajasthan and Delhi.
Talking about inflation, Chidambaram said: "It is common knowledge that the government of the day will pay a price for high inflation, especially if inflation persists over a long period of time". He, however, added that containing inflation was one of the top items on Centre's agenda.
