"In meeting the targets under the (expenditure) roadmap, I am conscious of the fact that the government would need to take and implement some difficult decisions in the coming months," Mukherjee said at an event organised by Ficci here.
"We cannot go on with the approach that is divorced from the reality. But I believe that Budget is not the only exercise through which all the work is to be done because I cannot ignore the ground reality that mere announcement of decisions if it cannot be pursued is serving no purpose as it happened in the past," he said.
Drawing confidence from the easing of inflation, Mukherjee said that the government expects interest rates to come down in days to come. It will thus help in boosting investment confidence. "Core inflation has moderated in the past three months and in the coming months we are looking at reversal of the policy rate, which should help in improving business sentiments," he said.
However, lurking fear of further spike in crude oil price could mute the quantum of rate cut by the Reserve Bank in the coming months. Crude oil prices have is hovering around USD 125 per barrel.
Highlighting the importance of the fiscal consolidation, the Finance Minister said "expenditure monitoring and better expenditure planning through the amended provisions in the FRBM Act wherein three years rolling targets of expenditure indicators have been prescribed."
The government has pegged fiscal deficit at 5.1 per cent of the GDP for 2012-13. The fiscal deficit was revised upward significantly to 5.9 per cent of the GDP against the target of 4.6 per cent in fiscal year ending March 31, 2012.
"The fiscal year 2011-12 saw deterioration in our fiscal balance with expenditure slippage on account of higher subsidy and growth slow down affecting the tax revenue collection," Mukherjee said.
Going forward, he said "a critical element of the strategy is to implement and ambitious but at the same time realistic fiscal consolidation roadmap and leveraging technology to give effect to quantum improvement in the government`s expenditure management."
Stressing on the need to put the economy on the higher growth trajectory, he said, "we need to strengthened our domestic growth drivers and encourage private investment to reach the pre-2008 crisis growth momentum and address supply constraints in the infrastructure and agriculture."
He expressed confidence that the fiscal and other reform measures could be taken forward and the economy can regain its lost momentum, as the situation today was quite similar to that in the nineties when there was no clear majority for any party.
Referring to the timeframe for implementation of the Goods & Services Tax (GST), Mukherjee said, "It does not depend on me. I require two-thirds majority in both Houses of Parliament to operationalize GST. Subsequently, a minimum of 15 out of the 28 states in the country will have to ratify the proposal as passed by Parliament."
He also said there was no trust deficit between the government and the industry. "Let me assure you that there is no trust deficit and without the cooperation of industry, the larger political establishment and civil society we cannot be equal to the gigantic task at hand," he said.