He said cutting expenditure is the easiest way to trim fiscal deficit. "If we cut Rs 1 lakh crore in expenditure, it would lower fiscal deficit to 2.9 per cent. But then growth will be impacted," the official said.
The government has targeted 3.3 per cent fiscal deficit for the current financial year ending March 2019.
The government's finances have shown improvement in July with fiscal deficit at 86.5 per cent of the Budget Estimate (BE), mainly on account of higher revenue collection, as per official data.
The deficit was at 92.4 per cent of BE at July-end of the last financial year.
"Income tax revenues are moving in right direction, GST mop up is also recovering and if we keep expenditure within control, we are confident to maintain the fiscal deficit situation. We don't want twin deficit problem," the official said.
On rupee, which fell to a record low of 72.91 to a dollar in intra-day trade Wednesday, the official said the government is watching the situation and would take appropriate steps as and when required.
The current account deficit (CAD), which is the difference between inflow and outflow of foreign exchange, rose to USD 18 billion or 2.4 per cent of GDP in April-June quarter on account widening trade deficit.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)