'Action plan to rein in high fiscal deficit soon'

The Finance Ministry said on Thursday it was committed to bring down burgeoning fiscal deficit and will soon come out with an action plan to achieve this objective.

Claiming that the fundamentals of the economy are 'very strong', the newly-appointed economic affairs secretary Arvind Mayaram said, 'we already have a roadmap to be followed for fiscal consolidation.

'The finance minister has laid out the forward path very clearly and I am quite confident about (outcomes of) the action plan. Wait for a while to have the action plan to unfold'.

The comments came in the backdrop of global bankers and rating agencies revising downward the gross domestic product forecast for the fiscal this week and the latest factory output showed a surprise contraction of 1.8 per cent in June against 9.5 per cent a year earlier.

The latest to join the growth revision was the research arm of the global rating Moody's which today cut GDP forecast to 5.5 per cent from 6 per cent.

Crisil, Citi and CLSA have also pegged down GDP in the range of 5.4 to 5.5 per cent earlier this week.

Though the government has budgeted only a 5.1 per cent of fiscal deficit for this fiscal, nobody is buying that argument as the

government has not done anything on the revenue generation front such as cutting and fertiliser subsidies and going ahead with divestments.

Till July end, the budget deficit has already touched 37 per cent of the budgeted amount.

Mayaram, who is on the government nominee on the board of the Reserve Bank, was talking to reporters after a meeting of the board of the central bank in Mumbai on Thursday.

Admitting that the deepening crisis in the global economy is posing challenges to the domestic economy, he said, "the global economic headwinds and fiscal deficit are threats to our growth. . ."

The fiscal deficit had touched a high of 5.9 per cent last fiscal against a budget target of 4.6 per cent.

"We are committed to move in that direction (achieving fiscal consolidation).

"(Because the) fundamentals of the economy are very strong and, therefore, we do believe that we have the required resilience to overcome these constraints," he said.

Early this week, new finance minister P Chidambaram had said that he will shortly launch a slew of measures to help foreign fund flows, review the controversial retro tax provisions and the new tax avoidance rules called GAAR, apart from many pending reform measures apart from measures to trim the high fiscal deficit and current account deficit.