Indian minister says cutting deficit 'imperative'

India's Finance Minister Pranab Mukherjee promised Tuesday the government would reduce the fiscal deficit as it seeks to put the nation's financial house in order.

"Fiscal consolidation is absolutely imperative," Mukherjee said in a speech to a World Economic Forum meeting in New Delhi.

He said the government would cut the deficit to four percent of gross domestic product by 2012, down from an expected 6.8 percent in the current financial year.

"This kind of (financial) tight-rope walking cannot be done for a long time," Mukherjee told more than 600 investors, fund managers and other delegates from around the world.

India's deficit, which stood at 6.2 percent last year, has been swollen by stimulus measures taken by the government to shield the economy from the impact of the global economic slump.

Prime Minister Manmohan Singh told the forum at the weekend that the government would take "appropriate action next year" to roll back the stimulus.

Mukherjee echoed the pledge.

The government is targeting growth of 6.5 percent this fiscal year and over seven percent next year. Medium-term it hopes for growth of nine percent.

But the high deficit and resurgent inflation is seen by economists as threatening the outlook for India's economic performance.