Prudent spending, higher revenues to allay economic worries, says DBS

By: |
Singapore | Published: November 8, 2019 4:30:11 PM

Encouragingly, cyclical growth momentum is getting a hand from reduction in rates and surplus liquidity conditions, wrote Radhika Rao, Vice Senior President and Economist at DBS in Singapore.

spending, revenues, DBS, economy news, indian economyMoody’s decision to change the outlook to negative reflects increasing risks that economic growth will remain lower. (Reuters)

The worries over India’s economic growth outlook will be over if fiscal consolidation takes place by prudent spending and higher revenues through privatisation receipts, along with a wider tax base, Singapore’s DBS Bank said on Friday. Encouragingly, cyclical growth momentum is getting a hand from reduction in rates and surplus liquidity conditions, wrote Radhika Rao, Vice Senior President and Economist at DBS in Singapore.

Looking past the transient spike in inflation, there is room for monetary authorities to provide more support this year, added Rao in comments on Moody’s Investors Service downgrade of India’s economic outlook to negative from stable. Better growth is necessary to lower overall public debt levels, which are currently above medium-term targets, Rao said, noting that Moody’s outlook change reflects concerns over growth outlook and anticipated fiscal slippage. “External vulnerability indicators are, meanwhile, buffeted by record high foreign reserves and comfortable import coverage,” Rao pointed out.

ALSO READ | After rating outlook cut, Moody’s gives solution to India on how to restore its credit rating glory

Moody’s decision to change the outlook to negative reflects increasing risks that economic growth will remain lower. But the Indian government on Friday reacted strongly to Moody’s ratings, saying the fundamentals of the economy remain quite robust and series of reforms undertaken recently would stimulate investments.

Do you know What is Revenue Deficit, Centrally Sponsored Scheme, Non Tax Revenue, Non Debt Capital Receipts, Consolidated Fund of India? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Next Stories
1Demonetisation once again? Rs 2000 notes can be banned, if govt takes former secy’s advice
2RCEP pact: Govt decision to pullback caused by failure of existing dumping duties on China
3China says agreed with US to remove tariffs as trade deal progresses