Spend more to revive economy, says Montek

The government has also proposed to increase fund allocation up to 30 pc

“People raised a point that why risk a higher fiscal deficit. We have argued strongly that we need that expenditure stimulus because the global economic situation is very difficult,” Ahluwalia said in an interview.

The government has projected a very high fiscal triggering alarm bells among investors and industry.

“The fiscal deficit issue is a very important one. I am one of the people in the Planning Commission who have been arguing that we need that extra stimulus. I am actually grateful that the Finance Minister weighed the issue,” he added.

On whether the government borrowing would impede credit flow to the private sector, Ahluwalia said, “If you are tolerating a 6.8 per cent of GDP fiscal deficit, I don’t think the Finance Minister needs to work out how they are going to do the borrowing.”

Top priority

According to him, whatever the government is going to do, it is going to be a certain drawing of resources. He said that the top priority is to get the country’s growth rate back.

“... our expenditure is oriented towards inclusiveness, we are trying to maintain a stimulus in the economy. Yes the fiscal deficit is high but as the Budget document shows, we will bring it down. That’s the message,” he noted.

Gross budgetary support is proposed to be increased by Rs 40,000 crore to Rs 3.25 lakh crore for the current fiscal. The government had provisioned Rs 2.85 lakh crore for the purpose in the interim budget.

For the current fiscal, the government has proposed in the Finance Bill to increase fund allocations up to 30 per cent for various flagship schemes.


CEA chief says IIP figure in line with economic survey

Chief Economic Adviser Arvind Virmani on Sunday, said India’s growth projections by international financial institutions are too low and asserted that industrial growth of 2.7 per cent in May is in line with the estimate of seven per cent this fiscal, reports PTI from New Delhi.

Industrial growth figure of 2.7 per cent in May is in line with seven per cent growth (plus-minus 0.75 per cent) for the current fiscal, projected by the Economic Survey, Virmani, said. “Overall the IIP growth is very much consistent and supportive of our projections...international financial institutions like World Bank and IMF are still way too low in their projections,” he said.