Expressing concern over fiscal deficit
, President Pranab Mukherjee on Monday said if subsidies are not contained below 2 per cent of the GDP, it may pose a serious problem for the economy
"Fiscal deficit which is not confined to 5.1 per cent of GDP as projected in the Budget and one of the concomitant of which that we must reduce the subsidies and keep it below 2 per cent of GDP is not materialised would pose serious problems," Mukherjee said at felicitation event by CII.
With the rising global prices of crude oil and hardening of other commodities, it is expected that fiscal deficit could breach the budget estimate for the current fiscal.
The major subsidies given by the Centre are for food, fertilisers and petroleum products.
Highlighting that the current account deficit (CAD) of around 4 per cent is a matter of concern, Mukherjee said, the economic growth "has been very slow, particularly since the global financial crisis".
"2008-09, it was 6.7 per cent. 2011-12, it has recorded 6.5 per cent. The first quarter of 2012-13, it is 5.5 per cent. No doubt it is disappointing," he said.
He added that even when exports have slowed down, the diversification of export destinations is yielding some positive results.
"For slowdown of exports from previous years from records of 30 per cent growth is no doubt an area of concerns but side by side if we look at the process of diversification of the export basket commodities and geographical direction of the export destination, you will find that the picture is not totally disappointing," he said.
Mukherjee, however, expressed confidence that the country would be able to overcome the present crisis through collective efforts of different segments of the economy.
"We should remain optimistic about the ability of the Indian economy to pull through the current bout of economic slowdown," he said.
The President also said the Indian economy during the last decade had grown by 8.75 per cent, which was higher than that of many other emerging economies.
"I always refer to other period of crisis not to find any justification for the present crisis but only to drive consolation and get back confidence that if we have overcome those problems in the past, it is possible for us to overcome the problems which (we) are facing today," he added.
Mukherjee said, "We need to be optimistic with entrepreneurial spirit to overcome the problem of high fiscal and current account deficits, high inflation and low growth".