High fiscal deficit a strategy to stimulate growth: FM

Finance Minister Pranab Mukherjee on Tuesday said the government has taken the calculated risk of high fiscal deficit to help stimulate growth, but would strive hard to bring it down to 4 per cent in the next two fiscals.

Noting that a fiscal deficit of 6.8 per cent was on the higher side, the minister said: "The global economic slowdown is likely to continue in the current financial year. . .  (but) we must come back to growth path as fast as possible."

"No doubt, I have taken a risk. . .  We cannot say we are out of the economic slowdown as yet," he said.

Mukherjee also ruled out any roll back of the stimulus measures announced earlier by the government.

Speaking at an interactive session with industry leaders in New Delhi, Mukherjee said the government has taken the risk of letting the fiscal deficit rise to achieve a higher growth rate.

Setting a target of bringing down the fiscal deficit to 5.5 per cent in 2010-11 and 2011-12, he said the finance ministry would work hard in the next 7-8 months to achieve this target.

"A single budget cannot solve all the problems," he added.

Image: India's Finance Minister Pranab Mukherjee at an election rally in Bihar.
Photograph: Krishna Murari Kishan/Reuters