While addressing the Parliamentary consultative committee meeting here on Wednesday, Sinha, also underlined the need for an all party consensus to bring down fiscal deficit and borrowing by both state and central governments as they were putting pressure on country's balance of payments. The minister had already indicated that he had no option but to present a "hard budget".

Cutting across party lines finance ministry's consultative committee members which included former finance minister Manmohan Singh agreed with Sinha that there should be national consensus on critical economic issues including cut in subsidies and reduction in interest rates.

Sinha also expressed concern over large borrowing for current consumption and said large trade and current account deficits were badly affecting investors' sentiments.

More than 50 per cent of theRs 95,000 crore fiscal deficit (six per cent of GDP) projected for this financial year went to meet consumption (revenue) expenditure. It is feared that the fiscal deficit for the system which included central and state governments and public sector would be over nine per cent of GDP.

The minister on his part said that the country was passing through a difficult phase due to adverse international situation and continued economic slow down in the domestic environment. He added that the intractable problem of fiscal deficit and the large trade deficit were putting pressure on current account deficit.

The finance minister informed the members of the committee that the response to direct tax collections was encouraging but indirect tax collection was not up to the desired level.

Expressing satisfaction over the growth in agricultural sector, he said, the rural economy would be the backbone for economic revival in future. As such, it was necessary to make the agricultural sector more self sufficient throughoffering incentives on inputs and with high productive investment in allied activities like irrigation, water-shed management etc.

The minister also underlined the need for give a greater thrust to the social sector schemes, particularly to benefit poor and weaker sections of the society.

Participating in the discussion, the members appreciated the government's efforts in bringing down the inflation rate. They also called for increase in public investment in the areas of power, roads, irrigation and in the social sector. The members made a case for simplification, rationalisation and streamlining of tax administration. Some of the members underlined the need to give special attention and protection to small scale industrial sector. The need for giving a boost to exports also figured during the meeting.