India: There is a case for fiscal stimulus: Niti Aayog Vice-Chair

• Niti Aayog Vice Chairman Rajiv Kumar has pitched for fiscal stimulus to boost growth with a rider that additional expenditure should be used only for increasing productivity and capital expenditure. Faced with slowing economic growth, the industry has been clamouring for a stimulus package from the government.
• “I do see a case for stimulus,” Kumar told PTI in an interview. He added however that additional expenditure should be used judiciously. Kumar’s comments come amid Finance Minister Arun Jaitley saying that he has not promised any fiscal stimulus, but would respond to the emerging situation.
• Jaitley’s remarks followed increased speculation over a possible fiscal stimulus that can go above INR400bn after six successive quarters of dip in the economic growth, which slid to 3-year low of 5.7% in 2Q17.
• The finance ministry has pegged the fiscal deficit target for FY17-18 at 3.2% of the GDP and 3% for FY18-19. Any fiscal stimulus to boost sagging growth would push up the fiscal deficit. Various experts have argued against fiscal stimulus as it would jeopardise the fiscal consolidation programme.
• On the apprehensions expressed about the stimulus, Kumar said: “It depends on how you increase government spending. 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.” Kumar further noted that the only issue then is, can you absorb stimulus productively.
• The newly constituted Economic Advisory Council to the Prime Minister (EAC-PM) wants the government to stick to its fiscal consolidation road map and has suggested that stimulus to the industry should not be at the cost of fiscal prudence. Chairman of the EAC-PM Bibek Debroy had recently said, “There is a consensus (among the members) … that the fiscal consolidation exercise should not be deviated.”

External Link : http://www.financialexpress.com/economy/i-do-see-case-for-fiscal-stimulus-says-niti-aayog-vc-rajiv-kumar/896552/

External Link : http://www.financialexpress.com/economy/modis-tightrope-walk-on-fiscal-stimulus-its-eac-vs-niti-aayog-surjit-bhalla-says-no-rajiv-kumar-says-yes/897303/