He also said India will clock a growth rate of 7-8 per cent despite global uncertainties and will retain the tag of the world's fastest-growing major economy.
"Our ability to be within that 7-8 per cent range is fairly certain though I see comments to the contrary but I am fairly certain.
"Even in this year, despite all the odds, we will be able to maintain our fiscal targets because when current account deficits are impacted by oil prices and strengthening dollar, the last thing that India can afford is to run itself into a twin deficit situation because a fallout of that is very serious," Jaitley said while addressing the annual general meeting of industry body FICCI here.
The government has budgeted to contain fiscal deficit at 3.3 per cent of the GDP in the current fiscal, lower than 3.5 per cent in 2017-18.
As per latest data, fiscal deficit in April-October period stood at 103.9 per cent of budget estimates.
Jaitley said oil prices have a direct impact on India, since the country is a major importer. India, he said, has a particular resistance capacity to deal with rising crude oil prices and when it breaches the limit, it can impact inflation, currency and the current account deficit (CAD).
The CAD, which is the difference between the inflow and outflow of foreign exchange, widened to 2.9 per cent of GDP in the July-September quarter from 2.4 per cent of GDP in April-June.
"When the global challenges stare us in the face, we want at least our internal domestic capacities be strengthened to put up our resistance. Indian economy is now fairly large for us to display a certain level of resilience notwithstanding the adverse global trends, IMF forecast of slight slowdown. We still maintain our position as the fastest amongst the major economies in terms of growth," the minister said.
Listing out the challenges to the economy, Jaitley said there is a need to get out of the "syndrome of difficulties in credit" and improve the liquidity situation in the market.
The second challenge is "even when the election year debate goes on, many like you (industry) will have to flag to different players in the political system the importance of sound policy and how much they can be blended with good politics".
Jaitley said India cannot afford to have fragile coalitions for stable policy decisions and continue on the path of reforms.
"...You need a decisive leadership, you can't have fragile coalitions because at the end of the day if one partner says I can pull down the government if you don't declare my state as special status, then those worse off can even say why not me? And you would have half a dozen wanting a special status," he said.
He said a coalition government would lead these kinds where the country probably will have a helpless Centre dependent on these kind of players.
"And what the founders of our nation envisaged that India, which is Bharat, which is a union of states, then ending up as a confederation of states and that is the last thing that India can afford.
"If you need policy clarity, you will need policy and directional stability and you will need a decisive leadership which moves in that direction which will then create an economy which is fast growing with various market reforms," Jaitley said.
The minister also said that under Ayushman Bharat scheme as many as 500,000 poor people got free medical treatment in the last two-and-a-half months.
Prime Minister Narendra Modi in September launched the Ayushman Bharat - Pradhan Mantri Jan Aarogya Yojana which aims to provide a coverage of Rs 500,000 per family annually, benefiting more than 10.74 crore poor families for secondary and tertiary care hospitalisation through a network of empanelled health care providers.