Outlining the roadmap for fiscal consolidation, Finance Minister Arun Jaitley today said the government will retain the fiscal deficit target for 2014-15 at 4.1% of GDP and reduce it further to 3% by 2016-17.
Presenting his maiden Budget, the Minister said the prevailing economic situation presents a great challenge and there was a need to introduce fiscal prudence that will lead to fiscal consolidation and discipline.
"My predecessor (P Chidambaram) had set up a very difficult task of reducing the fiscal deficit to 4.1% of GDP in current year... The target in indeed daunting.
"Difficult as it may appear, I have decide to accept this target as a challenge," he said.
Outlining the roadmap for fiscal consolidation, Jaitley said fiscal deficit would be brought down to 3.6% in 2015-16 and 3% by 2016-17.
The fiscal deficit which had touched a high of 5.7% in 2011-12, was brought down to 4.8% in 2012-13 and further to 4.5% in 2013-14.
The reduction in fiscal deficit by the UPA government, he said, was mainly achieved by a reduction in expenditure rather than by way of realisation of higher revenues.
Jaitley said there are challenges to lowering the fiscal deficit as the country had two years of low GDP growth, a almost static industrial growth, a moderate increase in indirect taxes, a large subsidy burden and not so encouraging tax buoyancy.
"The task before me is very challenging because we need to revive growth, particularly in manufacturing sector and infrastructure," he said, adding choice has to be made whether or not to be victims of mere populism and wasteful expenditure.