New Delhi Optimistic of 7-7.5 per cent economic growth in 2005-06, Finance Minister P Chidambaram on Wednesday said the government will not hesitate to take fiscal measures to check inflation while keeping deficit on leash.
"RBI has projected 7-7.5 per cent growth for the current year. We agree with the assessment and are optimistic about improving on our growth performance over that of the previous year (6.9 per cent)," Chidambaram said.
Chidambaram gave credit to the RBI for its prudent monetary management to keep inflation below 5 per cent despite the surge in global crude oil prices.
Regarding government finances, Chidambaram said fiscal indicators have shown how states have reduced deficits substantially.
States have also decided to carry forward fiscal reforms for halving revenue deficit to 0.7 per cent of GDP in 2005-06 and cut fiscal deficit to 3.1 per cent.
On tax reforms, Chidambaram asked non-VAT states to "come on board" by January 2006 so that the government could start consultations with states for a nationwide Goods and Services Tax.
However, he admitted that the Centre's fiscal consolidation process was slow and it will be "tough" to cut the fiscal deficit below 4.3 per cent and revenue deficit beyond 2.7 per cent.
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