Govt can meet fiscal deficit target of 5.3 per cent: Rangarajan

Prime Minister's Economic Advisory Council Chairman C Rangarajan on Monday expressed optimism that the government would be able to meet the fiscal deficit target of 5.3 per cent for the current financial year.

"I think fiscal deficit will be around 5.3 per cent of GDP as indicated by the finance minister," he said on the sidelines of an event in New Delhi.

Although the government had pegged fiscal deficit for the current financial year at 5.1 per cent of the GDP in the Budget, it has revised the target to 5.3 per cent in view of subdued revenue collection and rising fuel and food subsidy bills.

"I think second half will be better than the first half. We think that the growth rate in the current fiscal will be between 5.5 and 6 per cent," Rangarajan said.

The former RBI Governor also expressed hope that there would be further improvement in growth during the next financial year.

Growth in the first half of 2012-13 has fallen to 5.4 per cent, from 7.3 per cent in the same period last financial year. For the entire 2011-12 financial year, the growth had declined to 9-year low of 6.5 per cent.

The Reserve Bank of India, meanwhile, expects growth at 5.8 per cent in the current financial year.

Rangarajan said "the average per capita GDP today is only $1,600. If we grow at 8-9 per cent, by 2025 we will reach somewhere around $10,500. It is only then when India will graduate from a low income country to middle income country".

Therefore, he said, it is important for India to grow at a much faster rate.