New Delhi, Sept 21: The government is reportedly mulling over the idea of loosening its fiscal deficit target, in order to spend an additional Rs 500 billion in 2017-18 to stimulate the economy.
Two senior government officials, while speaking to Reuters on Thursday, said the additional expenditure in the current fiscal is part of the plan to revive the Gross Domestic Production growth, which has faced a slump for six consecutive quarters.
The report comes a day after Finance Minister Arun Jaitley assured “additional measures” to bring the economy back on track.
Jaitley, while conceding the fall of GDP to 5.7 per cent in April-June quarter as a “matter of serious concern”, said the Finance Ministry, in consultation with Prime Minister Narendra Modi, would roll-out a series of steps to rejuvenate the growth rate.
“We have taken note of all economic indicators which are available … the government will take any additional moves which are necessary. I am not in a position to announce today in the press conference. I will be certainly consulting the Prime Minister before that and when we decide, you will come to know,” he was quoted as saying by PTI.
Critics of the Narendra Modi-led dispensation at Centre have blamed the demonetisation drive of November 2016, along with the hasty implementation of Goods and Services Tax (GST) as the two primary reasons for the slump in GDP.
Former prime minister Manmohan Singh, while commenting on the state of economy on Tuesday, described demonetisation and the hasty roll-out of GST as “double whammy” for the economy.
“When 86 per cent of currency is withdrawn from circulation, plus GST, which was put in practice in haste.. lot of glitches are now coming up, it was bound to affect GDP growth adversely,” Singh said, while speaking to a news channel.
Jaitley, on Tuesday, held talks with Prime Minister Modi to discuss the lacklustre growth in GDP. The Finance Minister has been also holding rounds of deliberations with the Commerce Minister and Railway Minister, along with top bureaucrats, to plan the strategy for bringing the growth rate back above 7 per cent.
The Modi government, which promised two-crore jobs per year, was banking upon a robust growth in the economy to meet their targets. However, the GDP, which was wavering between 7.6 to 8 per cent last year, faced six consecutive drops. According to experts, the growth rate went down due to the decline in business activities of small, medium-scale and informal sector, which accounts for nearly 90 per cent of jobs in the Indian market.