CEA Subramanian on fiscal deficit: Growth key priority for now, but govt has eyes on target

Even as the current priority is to boost growth, the government has its eyes set on getting fiscal deficit right, Chief Economic Advisor (CEA) Krishnamurthy Subramanian said.

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"Investment as a per cent of GDP was 40 per cent in 2008 and this has come down to 29 per cent in 2018. This is worrying statistic for a growing economy," Subramanian said, (IE photo)

Even as the current priority is to boost growth, the government has its eyes set on getting fiscal deficit right, Chief Economic Advisor (CEA) Krishnamurthy Subramanian told CNBC TV-18 in an interview. The divestment and RBI dividend would help the government to keep the fiscal deficit under control, he also said. “If you look at actions that the government has taken, right now the priority clearly is that we are taking all the necessary steps to be able to get back on the high growth path, and that is the important aspect at this point in time. That said, the macroeconomy is always a delicate balancing act,” CEA Krishnamurthy Subramanian also said. At this point, it’s important to do all that helps in bringing the economy back on the high growth path, he added.

On Wednesday, CEA emphasized the need for private companies to come forward and give a boost to the economy by making investments. Reaffirming that while India’s economic fundamentals remain strong, it is investments that are hampering growth and is resulting in a slowdown. “The key driver is an investment. It is an investment that enhances productivity. Productivity then enhances purchasing power and creates better-paying jobs and demand,” Krishnamurthy Subramanian said at an event. “Around 2008-2009, our investment rates were touching 40% of the GDP. That has declined now due to the banking sector, the NPAs… the investment rates have slowed down significantly,” Subramanian added.

Also read: What pulls down China’s GDP growth to slowest level since 1992

Meanwhile, the economy is undergoing a slowdown with the first quarter of the ongoing fiscal posting a muted growth rate of 5.1 per cent. The government has announced a slew of measures over the last few weeks in order to revive the slowing economy.

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