Rajan said that macroeconomic stability during the global turmoil cannot be risked and the government and RBI should continue to bring down inflation.

Delivering the CD Deshmukh Memorial lecture, Rajan said there is a public discussion whether India should yet again postpone fiscal consolidation path with some arguing that it could lead to higher growth.

Rajan said that consolidated fiscal deficit of the Centre and states rose to 7.2 percent in 2015 from 7 percent in the previous year.

The NDA government had last year deviated from the fiscal consolidation path, postponing reduction in fiscal deficit target by a year.

Originally, the target was to bring down fiscal deficit to 3.6 percent of the GDP in 2015-16 but it has been postponed by a year. Now, government is targeting 3.9 percent in the current fiscal.

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