The finance minister's statement is significant as this is the first time that that he has officially admitted a possible slippage in fiscal deficit. Just a week back, the finance minister had said at the World Economic forum meeting that the fiscal deficit would be maintained at 5.6 per cent.

Replying to a short-duration discussion on current economic situation and its implications on Indian economy in the Rajya Sabha on Tuesday, finance minister also said that "what is humanly possible is being done to keep the fiscal deficit within the target of 5.6 per cent of the GDP."

Sinha further stressed that determining the fiscal deficit rate at 5.6 per cent was not unrealistic. Stating that he had not overestimated the revenues, the minister said the gross tax-GDP ratio for 1998-99was 9.8 per cent as against the 10.1 per cent in the previous finacial year. The fiscal deficit always hovered around six per cent in the decades of 80s and 90s, he added.

The broad money supply (M3), he said, did touch 20 per cent figure with the receipts from the Resurgent India Bond (RIB) fund. The figure had come down to 18.4 per cent and the indications were that the it might dip further, he hoped.

The finance minister also made it clear that there was no going back on the liberalisation process and added that his government was determined to pursue the "second generation economic reforms".

He said many members were of the view that widening gap of the fiscal deficit was the `villain' behind the price rise but it was not the case. If it was, it would have reflected on prices across the board on all commodities and not just in the primary article segment of the economy, which experienced a big leap of 17.6 per cent since July. The consumer price index accorded a large weightage on this aspect. Theprices of manufactured produce registered just one per cent increase over the last year, so also the prices of fuel, power and lubricants.

The finance minister also said the allegations of some of the members that the BJP government was in league with the hoarders, black marketeers and profiteers were unjustified. "You can accuse us of incompetence but we can not be accused of colluding with them", he said, reminding that nobody in his senses would like to lose the elections for such reasons.

Urging the house to look at the "cold facts", Sinha said what should be a matter of concern was that the agricultural production was decelerating for the past two decades, and so also the investments in the sector. "We have to push this up and see that the growth in the sector was not less than the population growth", he said.

Listing the reasons for the rise in prices of essential commodities, the finance minister said the heat wave conditions which took the toll of about 2,500 lives in may last did have animpact on the fruits and vegetable production too. The unseasonal rains for a week even on the Diwali day in the onion-growing belt had immediate impact on the prices of the bulbous vegetable in the rest of the country.

The centre, had instructed the states to take strict measures against hoarding and black marketing. While the onions imports were permitted at zero per cent duty, the import duty on oil was brought down to 15 per cent from 25 per cent.

Dismissing the allegations of corruption in the import of onions by the previous Delhi administration, the finance minister said the new Congress Chief minister had already ordered some sort of inquiry into it. All states were allowed to import onions if they could provide matching subsidy of 50 per cent and only Delhi government had taken up the initiative.

He said the the essential commodities act was in vogue and here was no effort to dilute it. Only some amendments proposed were pending before the joint select committee of the parliament. Cold storageand food processing were the areas which had been neglected, putting both farmers and consumers in difficulty during the sluggish seasons.