"We are moving in the right direction. That we started with a cap of cylinders, we increased the diesel prices. Yes, more needs to be done to bring it (subsidy) below 2 per cent (of GDP)... We have done something. Obviously we need to do more," Rajan said in an interview to Karan Thapar for CNN-IBN programme 'Devil's Advocate'.
The government, he said, needed to target the subsidies in a better way and that is possible through the cash transfer scheme. "There is no doubt that at least we have taken the first step".
Rajan further said that the revised fiscal deficit target of 5.3 per cent of GDP is achievable, but it would require "a fair amount of painful decisions".
The government's subsidy bill, which has been estimated at around Rs 1.80 lakh crore in the 2012-13 fiscal, is likely to go up substantially on account of domestic and global factors. The government has already sought an additional Rs 28,500 crore from Parliament towards the fuel subsidy.
Answering questions on growth prospects, Rajan said that India can achieve 6 per cent GDP growth in the second half of the current fiscal.
The economic growth rate has slipped to 5.4 per cent in the April-September period, from 7.3 per cent in the year-ago period. MORE
