Chief Economic Advisor Raghuram Rajan has said that to achieve the revised fiscal deficit target of 5.3 percent of GDP, government needs to take more painful decisions and the diesel price hike and cut in subsidised LPG cylinders are only the preliminary steps to keep the subsidy bill under check. Though he said that we are moving in the right direction with a cap of cylinders and increase in the diesel prices are in right direction but need to do more to bring the subsidy down to 2 percent of the GDP.
The government's subsidy bill is likely to go up substantially in the 2012-13 fiscal from the estimated at around Rs 1.80 lakh crore on the account of domestic and global factors. The government has already sought an additional Rs 28,500 crore from Parliament towards the fuel subsidy.
Rajan further stated that the government can check the subsidies target in a better way through the cash transfer schemes and India can achieve 6 percent GDP growth in the second half of the current fiscal. He added that the investments have slowed down across the economy and to push the economy, all the investments which are stalled need to be on track and keep going for new investments.