NITI Aayog Vice Chairman Rajiv Kumar has pitched for fiscal stimulus to boost the pace of Indian economic growth with a rider that additional expenditure should be used only for enhancing productivity and capital expenditure. He also said the industry has been demanding for a stimulus package from the government, while various experts have argued against fiscal stimulus as it would threaten the fiscal consolidation programme.
Talking on the anxieties expressed about the stimulus, he said “It depends on how you increase government spending. If you go and throw money away and give doles then, yes, of course it will give wrong signal.” He also said that “But if you are doing that by increasing productivity and capital investment by making, for example, more roads, more airports, more railways, nobody can argue that this will give a bad signal.” Adding further, he noted that “The only issue then is, can you absorb stimulus productively. Stimulus money should be used on increasing investment, increasing demand and improving physical and rural infrastructure.”
NITI Aayog Vice Chairman’s statement comes amid Finance Minister Arun Jaitley saying that he has not promised any fiscal stimulus, but would respond to the emerging situation. In a move to support higher government spending in the coming fiscal, the Ministry has pegged the fiscal deficit target for 2017-18 at 3.2 percent of the GDP, while for 2018-19 it has been set at 3 percent.