The fiscal deficit of about five per cent will not threaten Indian economy even though it could slow down the growth process, Reserve Bank of India Governor Y V Reddy said on Tuesday after attending the Joint Annual Session of the World Bank and the IMF in Dubai.
He also said the debt in India should be seen in the context of its medium-term implications and not short-term and indicated that the external debt were mostly of a long gestation period.
"In many of the countries where high fiscal deficit is posing a problem, it is mainly due to the high component factor of the foreign exchange in their debt while in India it was not the case," he said.
In India the passage of the Fiscal Responsibility and Budget Management Bill is intended to rein in deficit, he said adding the fiscal deficit should also be seen in the context of the domestic saving rate.