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Everyone Agrees That The Fiscal Situation Is Tight But Still They Will Be Able To Manage To Stick To Fiscal Deficit Target Of 3.2%: Laveesh Bhandari
The panel agreed that the government was unlikely to come up with fiscal stimulus package to boost economic growth despite the Central Statistics Office’s (CSO) advanced estimate of a 6.5% economic growth rate in the current financial year.
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The country’s top economists -- Abhijit Sen, Laveesh Bhandari and Arvind Virmani seemed unanimous in their view that the Narendra Modi government despite financial constraints will meet its fiscal deficit target of 3.2% of GDP in 2017-18.
“Everyone agrees that the fiscal situation is tight but still they will be able to manage to stick to the fiscal deficit target of 3.2%,” Bhandari said.
The fiscal deficit target, though, could be breached in the next financial year, before the country goes to polls, they said while speaking at the pre-budget round-table organised by BW BusinessWorld in association with news channel NewsX.
The panel also agreed that the government was unlikely to come up with fiscal stimulus package to boost economic growth despite the Central Statistics Office’s (CSO) advanced estimate of a 6.5% economic growth rate in the current financial year.
What will surely worry finance Minister Arun Jaitley, who presents his last full budget in less than two weeks, is the increase in the global crude oil prices.
“As we go into the next fiscal, the usual macro indicators that judge the stability of the economy starting to look distinctively worse,” Sen said adding that Inflation was clearly inching up and the uncertainty relating to the goods and services tax (GST) still needed to be addressed. Bhandari, who ruled out any fiscal slippage, added that the micro, small and medium enterprises were likely to be the focus for the government in the Union Budget.
While Sen believed that the macro-economic indicators, especially in the next financial year, were worrisome, Virmani said that the worst was over. “Things were bad but we are on the way up,” he said.
“Many of us in the forecasting business don’t agree with that it’s a mechanical forecast and does not take into accounts the latest data,” Virmani said.
Bhandari added that the government needed to be more proactive in creating new jobs, though a recent study pointed out that the job market was not as dismal as it was being perceived. “I expect some amount of action relating to the small-scale industries,” he said. The MSME sector is the largest employment provider.
The 12th Five Year Plan of the government underlined that a sum of Rs 24,000 crore was required to be directed to the sector for healthy growth.