India: Slowdown concerns to be addressed in Budget: Sources

  • The full Union Budget presentation in Jul 19 will provide an opportunity to initiate, as well as take forward some of the steps initiated to stem the ongoing slowdown in the economy, a senior Finance Ministry source said.
  • The concerns on the economy are in the areas of employment generation, boosting rural demand, consumption, as well as investment, the official added, without providing details of specific steps being contemplated in this regard.
  • “In general, slowdowns warrant that fiscal policy should provide a stimulus by stepping up public investment and RBI (Reserve Bank of India) monetary policy should provide a stimulus to private investment by lowering interest rates”, he said.
  • Asked whether the fiscal deficit will see a revision upwards to address the economic slowdown, the source said: ” It’s too early to think of the fiscal deficit but at times of economic sluggishness government expenditure goes up to support incomes and demand, not cut down public spending as a matter of application of policies.”
  • Another source said that steps may be taken export and investment fronts since these are also critical determinants of growth from the supply side, adding, however, that this was not the right time to specify details.
  • There is a likelihood of public investment in infrastructures and social welfare schemes, would get a leg-up in the 2019-20 Budget, he added.
  • The Asian Development Bank (ADB), the RBI and the IMF have cut India’s GDP growth forecast for 2019-20 to 7.3 per cent.
  • The government’s Central Statistics Office (CSO) has trimmed the country’s 2018-19 growth forecast to 7%, from its earlier estimate of 7.2%.

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