New Delhi, November 13, 2006 (PTI)

After indicating moderation of tax rate and hard look at tax exemptions, Finance Minister today favoured tough measures to cut expenditures for containing fiscal deficit.

"Soft options for reducing expenditures or increasing revenues are getting exhausted. We now have to take hard decision to restructure certain expenditures", Chidambaram told a global seminar on Defence Finance and Economics.

Asserting that India was progressing on fiscal consolidation, which has been accompanied by similar consolidation by state governments, Chidambaram said, "the government needs to stay steadfast on the path of fiscal consolidation and to achieve FRBM target."

The virtuous cycle of savings, investments and growth has enabled us to sustain above 8 per cent growth rate for nearly four consecutive years, Chidambaram said adding," we are now at the take off stage for even higher growth."

But for this to happen, he said, more fiscal consolidation was required and government dissavings have to fully reversed so that funds were available at affordable cost for investment in key sectors.

After services sector boom, Chidambaram said, the country was poised to become a manufacturing hub with industry recording a double digit growth lately.

But to ensure that high growth in services and manufacturing are sustained, he said, there has to be macroeconomic stability and for that fiscal consolidation was of utmost importance.