Government should target a structural deficit as an alternative to the fiscal deficit | The Indian Express

Government should target a structural deficit as an alternative to the fiscal deficit | The Indian Express

Written by Soumya Kanti Ghosh |Updated: June 3, 2019 9:56:24 am

The writer is the chief economic advisor with the State Bank of India.

Government should target a structural deficit as an alternative to the fiscal deficit

The figures on the expenditure side of GDP do not foretell a promising picture. The decline in private final consumption expenditure is a matter of concern, though an increase in government final consumption expenditure has been able to offset it.

“The Indian economy is likely to recover from the impact of demonetisation and the GST, and growth should revert slowly to a level consistent with its proximate factors — that is, to about 7.5 per cent a year,” the World Bank report said.

Friday, May 31, was an interesting day in Indian politics and economics. On the economics front, Q4GDP numbers plunged to a 20-quarter low while annual growth came to a five-year low of 6.8 per cent. However, despite much scepticism, India could stick to its fiscal deficit of 3.4 per cent for FY19. Bank credit growth declined by Rs 1.5 lakh crore in April, but this has always been a seasonal phenomenon. On the political front, the country got its first woman finance minister (PM Indira Gandhi did hold the portfolio, but that was only as an additional charge) in 72 years.