Time for Indian Govt. to Boost Spending, Widen Fiscal Deficit: Official

A customer hands Indian currency notes to an attendant at a fuel station in Mumbai, August 13, 2018.

Swati Bhat (Reuters)

India’s current fragile economic conditions call for government action to boost spending in the coming financial year, allowing for a widening in the fiscal deficit to bolster growth, a senior official familiar with government policymaking said.
The government should invoke the escape clause under the Fiscal Responsibility and Budget Management Act but stay within the prescribed 0.5 percent wiggle room allowed in an extraordinary year under the guidelines, said the official, who spoke on condition of anonymity.
“Going forward for next year, there is a need for both structural and counter-cyclical measures. For counter-cyclical measures the government needs fiscal space and the present conditions are appropriate to invoke the escape clause,” the official said on January 7.
The government in its budget in July had proposed to bring down the fiscal deficit to 3.3 percent in the current fiscal year ending March 2020 and then reduce it further to 3 percent in 2020/21.
Most economists and market participants however see the current year’s fiscal deficit touching 3.7-3.8 percent of GDP, as growth has slowed drastically with the Indian economy expanding just 4.5 percent in the July-September quarter, its weakest pace since 2013.
A spokesman for the Finance Ministry did not respond to requests for comments.
India needs to grow at about 8 percent a year to create enough jobs for the millions of youth joining the labor force each year, yet many economists see the current slowdown continuing for another year or two, underlining the case for urgent reforms.
“GST [goods and service tax] revenues are low, direct tax collections have fallen. To say the government is going to maintain a 3.3 percent fiscal deficit in the current circumstances is unrealistic,” the official said.
The government needs to spend in order to boost the economy as monetary policy actions alone have done little to revive credit demand and restart the growth engines.
The central bank has cut interest rates by 135 basis points since last February, but that has had little impact on growth.

Myanmar Summary

အိန္ဒိယနိုင်ငံ၏ အထိအခိုက်မခံနိုင်သော လက်ရှိ စီးပွားရေးအခြေအနေများအရ အစိုးရအနေဖြင့် လာမည့် ဘဏ္ဍာနှစ်တွင် သုံးစွဲမှုတိုးမြှင့်လာရန် လိုအပ်နေသည်။

ပြီးခဲ့သည့် နှစ်ဇူလိုင်လက ထုတ်ပြန်ခဲ့သည့် ရသုံးမှန်းချေငွေစာရင်းတွင် ၂၀၂၀ ခုနှစ် မတ်လတွင် ကုန်ဆုံးမည့် ဘဏ္ဍာနှစ်အတွက် ဘတ်ဂျက်လိုငွေပြမှုကို ၃ဒသမ၃ ရာခိုင်နှုန်းအထိ လျှော့ချရန် အဆိုပြုထားပြီး ၂၀၂၀-၂၀၂၁ ဘဏ္ဍာနှစ်တွင် ၃ ရာခိုင်နှုန်းအထိ လျှော့ချရန် အဆိုပြုထားသည်။

သို့သော် အိန္ဒိယနိုင်ငံ၏ စီးပွားရေး ဖွံ့ဖြိုးတိုးတက်မှုမှာ ၄ဒသမ၅ ရာခိုင်နှုန်းသာရှိပြီး စီးပွားရေး တိုးတက်မှု သိသိသာသာ နှေးကွေးလာသောကြောင့် စီးပွားရေးပညာရှင်အမျာစုနှင့် ဈေးကွက်အတွင်းမှ လူများကတော့ လက်ရှိနှစ်၏ ဘတ်ဂျက်လိုငွေသည် နိုင်ငံ GDP ၏ ၃ဒသမ၇- ၃ဒသမ၈ ရာခိုင်နှုန်းအထိ ရောက်နိုင်သည်ဟု ခန့်မှန်းထားသည်။

SOURCESwati Bhat (Reuters)
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