New Delhi: Assuring the nation of bringing back the economy on track, Prime Minister Manmohan Singh on New Year eve announced to begin the process of fiscal consolidation hinting at phased rationalising of prices of petroleum products.

"Both goals of expanding new investment and achieving energy efficiency require a more rational pricing policy, aligning India's energy prices with global prices," Singh said in his New Year message to the nation.

Hinting at the pressure building up due to rationalisation of energy prices he said, "This cannot be done immediately, but we need to outline a phased programme for such adjustments and then work to develop the support for making transition. I realise that this will not be easy, but unless we can achieve this transition we will not be able to promote energy efficiency as much as we should, and we will certainly not be able to attract enough investment to expand domestic energy supplies".

Prime Minster expressed concern over the fiscal deficit caused by subsidy. He said, “Fiscal stability is mainly because we took a conscious decision to allow a larger fiscal deficit in 2009-10 in order to counter the global slowdown ... But like other countries that resorted to this strategy, we have run out of fiscal space and must once again begin the process of fiscal consolidation," he added.

It is important to ensure that the growth process is not jeopardised and equally important is, national sovereignty and self respect are not endangered, Singh added.

"The most important step towards restoring fiscal stability in the medium term is the Goods and Services Tax. This would modernise our indirect tax system, increase economic efficiency and also increase total revenues," he said.

JPN/ Bureau