RBI chief says government must cut spending

Mumbai: The Indian government must reduce spending and not just raise taxes for fiscal consolidation, the Reserve Bank of India's Governor Duvvuri Subbarao said on Tuesday, a day after the central bank kept interest rates steady.

He said raising taxes was not the same as reducing the fiscal deficit and added it was important to look at the quality of fiscal consolidation.

The government failed to contain its fiscal deficit in the last financial year that ended in March and economists expect it to overshoot the target of 5.1 percent of GDP this year also.