Addressing the National Development Council (NDC) meeting here, the Finance Minister said: "It was imperative to contain the fiscal deficit by augmenting resources and controlling expenditure.
"...some measures may cause immediate pain but this was necessary to ensure that the fiscal deficit came down to 3 per cent in the next three years. Steps were also being taken to contain the Current Account Deficit (CAD)."
The government in the recent past has hiked diesel prices by over Rs 5 per litre and capped the number of subsidised LPG cylinders to six per family in a year.
The Minister also underlined the need to control gold import, which has contributed USD 64 billion to the widening CAD.
Mr Chidambaram, however, expressed optimism that the Indian economy would continue to grow at a healthy rate despite the global economic troubles. "Our economy has strong fundamentals and factors such as high savings rate, growing services sector, a large middle class which continues to create demand and technical and qualified manpower and the youth," he explained.
The minister also lauded states for containing the fiscal deficit to 2.1 per cent of the GDP and also for generating revenue surplus of 0.75 per cent.
Describing the Direct Benefit Transfer scheme as "game changer", he asked the states to adopt the programme which seeks to use technology-enabled platform to transfer benefits in an efficient manner directly to the people.
He further said that in the initial phase, subsidies relating to petroleum, food and fertiliser would not be distributed through this scheme and only those schemes which were amenable would be taken up.
Fiscal deficit for the ongoing financial year 2012-13, has been revised upwards to 5.3 per cent, from 5.1 per cent in view of increased expenditure and lower than estimated revenue realisation.
Meanwhile, the CAD in the 2011-12 fiscal year was 4.2 per cent and the government expects to bring it down to below 4 per cent in the current fiscal year.