Taking a leaf from Pranab’s legacy

President Pranab Mukherjee as Finance Minister had announced austerity measures during the fag-end of his term in office. The various austerity measures helped the government to contain the fiscal deficit at 4.9 per cent of the GDP in 2011-2012, against the budgeted target of 5.1 per cent. Although not really on the best of terms with Pranab Mukherjee, Finance Minister P Chidambaram has decided to take a leaf out of Mukherjee’s legacy, to contain the deficit that threatens to spiral out of control. Chidambaram is obviously worried as the situation threatens to slip out of his control just ahead of polls.

Grapevine has it that a determined Chidambaram is all set to pull out all stops to remedy the situation. Nomination of economic wizard Raghuram Rajan as RBI Governor and austerity measures are all signals of a desperate Chidambaram trying to salvage the economy. Chidambaram is confident that with these measures it will be able to contain the fiscal deficit, or gross borrowings, at the projected level of 4.8 per cent of gross domestic product (GDP) in 2013-14. In the context of the current fiscal situation, there is a need to continue to rationalise expenditure and optimise available resources, goes the argument.