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CEA reiterates that India does not need further fiscal stimulus

24 Sep 2015 Evaluate

Government's chief economic adviser (CEA) Arvind Subramanian, despite GDP growth seen at the lower end of an 8.1 percent to 8.5 percent target in the current financial year, has reiterated that India does not need further fiscal stimulus to revive the economy. Subramanian said that "I don't think extra stimulus at this stage is necessary,' the government 'will and must' meet a fiscal deficit target of 3.9 percent of GDP in the current fiscal year.

Subramanian who was instrumental in Finance Minister Arun Jaitley’s decision to soften the fiscal deficit target from an initial 3.6 per cent, to free up resources for a growth-boosting splurge on roads and railways, said this public spending along with consumption will be the “big engines” of the economy in the short-term as debt-ridden private companies could take time to raise investments.

He further noted that despite the shortfall in rains and export slump, the economy was still expected to grow at just over 8 percent in the current financial year, higher that private economists’ forecast, though he added that “The external environment has been much worse than what we thought. May be, we will be at the lower end of our forecast”.

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