Fiscal deficit: Move cautiously, says chief economic adviser

India’s Chief Economic Adviser Raghuram Rajan (in pic) on Tuesday cautioned against moving too quickly on efforts to narrow the widening fiscal deficit as it might impact economic growth substantially.

“Bringing down fiscal deficit will need enormous efforts and it will be wrong to expect any turnaround in the next six months based on whatever measures taken recently. If we do it too quickly it will impact growth,” Rajan said in his first interaction with media after taking charge.

He, however, said that reducing fiscal deficit by way of reducing subsidies is important. Expressing concern over the growing current account deficit, he warned against undue dependence on foreign institutional investment, and said government must focus on foreign direct investment.