"There is a debate between austerity and growth and we have made up our mind to contain fiscal deficit," Rangarajan told reporters on the sidelines of a function on Statistics Day at the Indian Statistical Institute here.
He said the government would not go in for providing stimulus across the board and that only specific sectors would be considered for the measure.
"A fresh stimulus package is difficult like in 2009 due to high fiscal deficit, but only selected sector-specific stimulus could be considered," he said.
Rangarajan said there is need and scope for cutting subsidies on LPG, fertiliser and diesel to contain fiscal deficit which is targeted at 5.1 per cent of the GDP for this fiscal from 5.7 per cent in 2011-12.
"But for that we must build up a political consensus for good economics. Subsidies have been growing. We cannot trifle with food subsidies....But there is scope of reducing subsidies on fuel and fertilisers," he said.
"With kerosene, I can understand that there is a sentiment (for increasing price). I am of the opinion that diesel and LPG prices should be adjusted protecting some communities with low income," he said.
Asked for a time frame for the government to cut subsidies, Rangarajan said, "I cannot predict a time frame, but actions will be taken because actions will be needed". (MORE)