Fiscal deficit should be 3% by 2010-11: Chief Economic Advisor

As agencies put India's sovereign rating under surveillance due to a worsening fiscal deficit, Chief Economic Advisor to the Finance Ministry Arvind Virmani on Monday said that the country should aim at getting it back to the three percent mark by 2010-11. "As you have seen, Finance Minister Pranab Mukherjee has pointed out that he intends to return to the FRBM targets, which is three percent, at the earliest ... I can say categorically from my personal view (that) by 2010-11 we should aim to restore the fiscal deficit (to the target of three percent) as the first thing," Virmani said. He said that in the short term, the problem is lack of demand, so it is necessary to have a fiscal deficit. "That is what everybody is doing across the world. So I find it puzzling when people say that it is not necessary. I believe both monetary and fiscal policy have to take on the problem. It is a positive factor, not negative. What can be a legitimate question is what will happen, let's say, 2010 onwards," he added. India's fiscal deficit is projected to more than double to six per cent of GDP this fiscal against the budgetary target of 2.5 percent. For the next fiscal, the deficit is estimated to be 5.5 percent of GDP.