To avoid any credit rating downgrade, finance minister P. Chidambaram on Monday unveiled a five-year fiscal consolidation plan to rein in the fiscal deficit to 5.3 per cent this year. The government also accepted most recommendations of the Kelkar Committee report on a fiscal consolidation roadmap.
The minister said the government planned to cut the deficit further to three per cent by 2016-17, from 5.8 per cent in 2011-12.
“While funds will be available for essential expenditure, especially capital expenditure, every effort will be made to avoid idling of funds,” Mr Chidambaram said, adding the government will increasingly rely on Aadhaar-enabled direct cash transfers.
The burden of fiscal correction must be shared equitably by all stakeholders, he said, but the “poor must be protected and others must bear their fair share”.