'Will go all out to rein in fiscal deficit at 5.3%'

The government will make all efforts to restrict fiscal deficit to 5.3 per cent of gross domestic product for the current financial year, Prime Minister's Economic Advisory Council chairman C Rangarajan said on Monday.

"I think our attempt will be to see that we remain as close as possible to revised fiscal deficit that has been indicated by the finance ministry.

"All efforts will be made to get to that number," Rangarajan told reporters on the sidelines of an event organised by Export-Import bank of India.

Although the government had pegged fiscal deficit for the current financial year at 5.1 per cent of the GDP in the budget, it has revised the target to 5.3 per cent in view of subdued revenue collection and rising fuel and food subsidy bills.

"I think still there are about 4-5  months more for the end of the year. There are many actions that are possible," he said when asked how the government will meet fiscal deficit target after lukewarm response to telecom spectrum auction.

The PMEAC chief's comments come in the backdrop of lukewarm response to the 2G spectrum auction which could fetch the government only Rs 9,407 crore (Rs 94.07 billion) as against the target of Rs 40,000 crore(Rs 400 billion).

The government intends to go in for another round of spectrum auction before end of the current fiscal.

On depreciation of the rupee, Rangarajan said: "I think the capital inflows during the current year will be adequate to cover the Current Account Deficit. . . I believe the rupee will stay around this particular range (Rs 54-55 a dollar) even by the end of this year."

The rupee had slipped below 55-level against dollar on last Friday, recording the largest fall among its major peers globally in the past 30 days.

Recently, Finance Minister P Chidambaram had expressed confidence that current account deficit (CAD) will come downto 3.7 per cent of GDP in 2012-13.

In 2011-12, CAD touched a 30-year high of 4.2 per cent of the GDP or USD 78 billion. CAD occurs when the country's total imports and transfers are higher than its total exportsand transfers.

On key policy rates cut by the Reserve Bank, Rangarajan said: "We need to watch the behaviour of prices for some more time. Of course, the Reserve Bank will take all factors into account, but there is still some time for Reserve Bank to take a decision."

The RBI will come out with the mid-quarter review of monetary policy on December 18. The third quarter will be announced on January 29.

RBI, in its second quarterly review of policy last month, had refrained from lowering key interest rates in view of high inflation despite pressure from the industry and nudging by the Finance Ministry.

Image: C Rangarajan