Food subsidy is of paramount importance: Rangarajan

"The target of the government as a part of fiscal consolidation exercise is to bring down subsidies as a percentage of GDP. But providing complete food subsidy is of paramount importance for countries like India," he said here.

For this purpose, other subsidies would have to be pruned like those on petroleum products and diesel which the government had done recently, he said speaking at an interactive session at the MCC Chamber of Commerce and Industry.

Rangarajan said the government had laid down the road map for fiscal consolidation as both higher fiscal deficit

and current account deficit (CAD) deters capital flows.

The former RBI governor said taming inflation by the right balance of monetary and fiscal policies was also important at the moment and the government was tackling the issue with extreme seriousness.

Rangarajan said rating agencies should take note of the various measures being taken by the government.

According to him, growth rate had slowed down but not to the extent which other countries had experienced.

"A nation which has a stable taxation regime and reforms process is on the move," he said.

Going by economic trends, Rangarajan said growth would be between 5.5 per cent to six per cent in the current fiscal and CAD would be between 3.5 per cent to 3.6 per cent of GDP .

The trends also point out that capital flows would be adequate to finance CAD and rupee would not depreciate further and stay at current levels, he added.