Letters to the editor

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Published: March 5, 2015 12:22:25 AM

Balancing deficit and spending

Balancing deficit and spending
Balancing between fiscal deficit and the pressing need for increased infrastructure funding has engages the complete attention of the Modi-led government. Budget FY16 seeks to achieve a fiscal deficit level of 3% of the GDP, spread over three years from now, pushing the deadline by a year. But this has been done with valid justifications. The setting up of an exclusive National Investment & Infrastructure Fund to spur infrastructure growth and remove bottlenecks is a good move as is increased room for public spending as this will simulate the economy. Sectors like healthcare, education and defence have also got their due. Despite the limitations of the Centre, an amount of R7,940 crore has also been provided for capital infusion into public sector banks, something that the government was initially hesitant to do. While the fears of upside risks to inflation have now been largely done away with, the government expects the CPI inflation to get closer to the 5% level, which means we are inching closer to the RBI comfort zone of 4%. The kind of structural adjustments effected and the ones proposed in both the Economic Survey and the Budget should hopefully provide additional monetary space for RBI to go ahead with the rate cuts to boost growth. Both policy statements are based on concrete economic wisdom and are inclusive in the true sense of term with well-defined directions and destinations.
Srinivasan Umashankar, Nagpur

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