Jaitley urges states to stick to financial discipline

Union Finance Minister Arun Jaitley on Monday urged state governments to stick to financial discipline and "learn to live and spend within the means" to maintain the fiscal deficit of the country.

Jaitley committed to fiscal discipline in his February 29 budget, lowering the deficit target further to 3.5 percent of gross domestic product in the fiscal year that starts this month, surprising investors.

"All of us will have to learn to live and spend within the means and stick to the financial discipline. We have seen, ever since we have shown this tendency in the last budget of spending more but yet sticking to fiscal discipline, this has brought immediate result in terms of interest rates, in terms of the credibility of the Indian economy itself globally," Jaitley said at a conference of state finance secretaries in New Delhi.

Jaitley also said it was important for the states to focus spending on social sector and in the rural areas.

"There is now an important national focus that larger expenditure must be spent into the social sector, into infrastructure creation, into rural areas. These are the areas which have been conventionally found lacking in the past and therefore, we must focus on specific expenditure in those areas," Jaitley said.

Jaitley increased spending on farm and social sectors in the 2016-17 fiscal year in a boost to rural India. He also curbed capital expenditure growth compared to the previous year.