Finance Minister Nirmala Sitharaman has said that India would not worry about missing its budget deficit target as it seeks to step up spending to support the economy. She mentioned the stimulus spending will not be wound down in a hurry. She added the government and the central bank together have done a good balancing act.
Sitharaman, who reviews government expenditure every 15 days, said she will push state firms to accelerate spending. Prime Minister Narendra Modi last month expanded support measures to Rs 30 trillion ($120 billion), or 15 per cent of the economy, to rescue companies and save jobs lost due to the Covid-19 pandemic, adding to global stimulus that has touched $12 trillion.
Besides, economists see the additional spending, along with falling tax revenue, pushing India’s budget gap wider to 8 per cent of gross domestic product (GDP) in the current financial year, more the double the targeted 3.5 per cent. ‘As regards the coming year, we need to do an assessment,’ she said ahead of the next fiscal year’s Budget due February 1. ‘I am not sure that I can immediately curtail expenditure. It will have to be a careful balance because the momentum that the economy gains should be sustained.’