Expenditure compressions are quintessentially political decisions: D Subbarao

MUMBAI: The Reserve Bank of India, though reassured about the fiscal consolidation road map prepared by the finance minister, is sceptical about the prospects of achieving the target given that politics will play a bigger role in its success.

"Expenditure compressions are indeed budget allocations, which are quintessentially political decisions, and in a vigorous economy like ours there will be challenges to expenditure compressions," Governor D Subbarao told ET in an interview. "FM has said that he hopes to meet that. And we have taken that into account in our calculations. He gave the broad contours of the road map," he said. "Beyond that, how it will evolve is a question that the FM will manage and it will also depend on a number of factors."

Monday's announcement of a road map to contain fiscal deficit to 3% by fiscal 2017 had raised hopes of a rate as RBI had been demanding that the government rein in its finances.