India fin min vows no compromise on fiscal prudence

NEW DELHI - India will not compromise on fiscal prudence and will contain its fiscal deficit and narrow it to 3 per cent of gross domestic product by the fiscal year ending in March 2017, Finance Minister P. Chidambaram said on Wednesday.

The comments come a day after Fitch Ratings had warned the setback for India's ruling Congress Party in recent state elections could imperil the country's fiscal deficit target by tempting the government to have less restraint on spending.

India's fiscal deficit target for the current fiscal year ending in March 2014 is set at 4.8 per cent of GDP and Chidambaram has repeatedly pledged the country would meet the target.

"There will be no compromise on the decision to walk on the path of fiscal prudence and contain the fiscal deficit step by step, year by year, until we the reach the goal of 3 per cent of GDP in 2016/17," Chidambaram said.

The finance minister also highlighted the government would do all it can to moderate inflation, given the central bank only has monetary policy as a "blunt tool" to contain rising food prices.