sqlite issue with heroku

I was using sqlite gem for my rails project, and since I had to put the app on Heroku, and Heroku doesn't support sqlite, I added pg gem to my Gemfile.

 gem 'pg', '0.17.1'

But now I am not able to run the project locally on my machine.

Specified 'sqlite3' for database adapter, but the gem is not loaded. Add gem 'sqlite3' to your Gemfile (and ensure its version is at the minimum required by ActiveRecord).

I am getting this.

Please help.