Pranab Mukherjee : Difficult to meet 4.6% fiscal deficit target

India will struggle to meet a fiscal deficit target of 4.6 percent for the fiscal year that ends in March, Finance Minister Pranab Mukherjee said on Wednesday, calling it a "major challenge".

"It will be difficult to achieve the target of fiscal deficit of 4.6 percent for the current financial year though we will make our best efforts to reach as near as possible," Mukherjee said.

FM added that inflation will drop to between 6 percent and 7 percent by the end of March.

India's headline inflation was a 7.47 percent in December, a two-year low as food price pressure eased dramatically.

The current time is most challenging for all policymakers "...we have difficult 2 -3 months in the current fiscal. Our growth for 2011-12 may be around 7 percent plus or even less than that. There are also concerns about central government finances for the current fiscal", he said.

He, however, expressed hope that the Reserve Bank would take appropriate steps in its forthcoming monetary policy review on January 24 to keep the growth momentum.

"Going forward, I am sure RBI will take into account important concerns of balancing the targets of controlling inflation and keeping up growth and employment generation," he said.

The economic growth during the first half of the current fiscal has slipped to 7.3 percent from 8.6 percent in the corresponding period a year ago.

On fiscal deficit, he said the performance during the first half of 2011-12 poses some risks on both receipts as well as expenditure.

Asian stocks, euro fall after S&P downgrade warning

Asian stocks and the euro fell on Today after ratings agency Standard & Poor's warned it might downgrade euro zone countries en masse if European leaders fail to produce a credible plan to solve the region's debt crisis at a summit later this week.

The unprecedented warning brought to a halt a rally in global equities that began last week and had continued on Monday, when the leaders of France and Germany agreed a plan aimed at guiding the region out of its two-year-old crisis.

European stocks were expected to fall back from a five-week high struck in the previous session, with major regional bourses seen opening as much as 0.8 percent lower.

"We are entering a critical stage," said Kenichi Hirano, operating officer at Tachibana Securities in Tokyo.

"There are high market expectations for positive developments out of the European leaders' meeting this week and if there are any indications that decisions will be pushed back it will have negative consequences for the market."

Oil and copper prices also retreated after the S&P statement, which came late in the US trading day, while Wall Street index futures fell and US Treasury yields edged down, indicating investors were seeking safety in the dollar.

MSCI's broadest index of Asia Pacific shares outside Japan fell 1.8 percent, with the heaviest losses in the growth-sensitive materials sector.

Tokyo's Nikkei share average fell 1.4 percent, while S&P 500 futures eased 0.6 percent, pointing to a lower start for Wall Street after Monday's 1 percent gain.

Financial bookmakers called the FTSE 100 to open down 0.8 percent, Germany's DAX to fall 0.7 percent and France's CAC-40 to slip 0.5 percent.

S&P said it had told 15 of the 17 euro zone countries, including Germany, France and four others with the top AAA credit rating, that it might downgrade them within 90 days, depending on the outcome of Friday's summit.