Replying to supplementaries during the Question Hour in Rajya Sabha, he said fiscal prudence is required to put the country's economy back on track. (Agencies)
If fiscal deficit goes out of control that would mean the nation is borrowing more to finance its current expenditure and will leave behind a legacy of debt, he said.
"Fiscal deficit has to be maintained at acceptable levels," he said.
The Finance Minister, however, refused to give target for 2014-15, saying the budget that would be presented by him on Thursday will spell out those numbers.
The fiscal deficit in 2013-14 was 4.5 percent of the GDP, down from 4.9 percent in the previous year. The fiscal deficit was 5.8 percent in 2011-12.
To reduce fiscal deficit below desirable level and to improve macro-economic environment, the government has taken various measures for rationalisation of expenditure and optimisation of available resources.
"The level of fiscal deficit during current year (2014-15) up to May is Rs 2,40,837 crore, which is 45.6 percent of Budget Estimate of 2014-15," he said.
Jaitley said the government has adopted a roadmap for fiscal consolidation following amendment to the Fiscal Responsibility and Budget Management (FRBM) Act. FRBM Act provides for lowering fiscal deficit to three percent of GDP.
The Finance Minister said that he personally favoured bringing down fiscal deficit by expansion of the economy and tax buoyancy rather than by contracting expenditure.
"Despite several challenges, the government has been steadfast in policy of fiscal rectitude. In the medium-term framework, the reduction in fiscal deficit has been designed with a judicious mix of reduction in total expenditure as percentage of GDP and improvement in gross tax revenue as percentage of GDP," Jaitley said.
Replying to supplementaries during the Question Hour in Rajya Sabha, he said fiscal prudence is required to put the country's economy back on track.