 "We will contain fiscal deficit target, says Chief Economic Advisor Arvind Subramanian")
New Delhi: The government is committed tocontaining fiscal deficit at 4.1 per cent of the GDP thisfiscal, Chief Economic Advisor Arvind Subramanian saidon Friday.
“For this year, we are committed to meet 4.1 per centfiscal deficit target. I think we will have to re-evaluate thefiscal strategies generally … We will have to take overalldecisions,” he said.
He was briefing media after the Finance Ministry tabled’Mid-Year Economic Analysis 2014-15’ in Parliament.
The review said: “The Government is committed to meetingthe fiscal targets for FY 2015, despite the difficult oddsengendered by a combination of these factors. “How ambitious a target was this? Evaluating the budget from the revenue side suggests that the target was ambitious,” it said.
It said evaluating the fiscal performance this yearshould take account of the legacy costs and the ambitioustargets that were inherited.The Budget inherited the targeted fiscal deficit of 4.1per cent of GDP, down from 4.5 per cent in the previous year,the review said.
Subramanian further said with the new government there isa relatively “unencumbered political mandate” for decisiveeconomic change and that is reflected in the actions that havebeen undertaken.“The overall growth outlook has improved considerably,“he said, adding the possibility of public investment being anengine of growth, should be given more serious consideration.
“We see some signs of private consumption stirring. Whatwe are yet to see decisively is private investment picking up…We have identified that public investment itself could bean engine of growth going forward. Public investment couldcrowd in, private investment could complement.”
On revenue mop up, he said the reason for the taxcollection numbers “being not as bright as expected” is partlydue to the optimism in the projections and lower economicgrowth than expected in the budget.
Talking about price situation, Subramanian said that theFinance Ministry’s assessment is that the decline in inflationis likely to continue with a strong potential for surprise onthe upside.
To a question on gold, Subramanian said the pick up ingold import in November was partly because of holiday seasonand partly because genuine uncertainty about policy whichleads people to hold gold.
He also said demand for gold went up because of highinflation (it become anti-inflation hedge) and world goldprices were going up."(Now) both those fundamentals have changed dramaticallyand we expect gold imports to remains steady going forward,“he added.
PTI