Rangarajan says fiscal consolidation must in a growing economy

MUMBAI: Prime Minister's Economic Advisory Council Chairman C Rangarajan on Tuesday said that the process of fiscal consolidation must start as the economic growth is picking up and fiscal deficit is unsustainable in the long-term.

"The process of fiscal consolidation must start... there are signs of good growth in the economy and finance minister has suggested that the present level of fiscal deficit is not sustainable over a long period...therefore process has to start," Rangarajan said at an event in Mumbai.

The fiscal deficit, as a percentage of GDP can be lower in the next fiscal, Rangarajan, who is a former Reserve Bank Governor, said. The Goverment has estimated a fiscal deficit of 6.8 per cent in FY10.

On the ballooning inflation, Rangarajan said the Government will take appropriate steps to check the food price-driven inflation in the approaching months after assessing the price conditions.

"It is extremely important to watch the behaviour of prices and therefore Government will take action depending upon how prices behave in the next few months," Rangarajan said.