Given the need for increasing public investment to push growth, Finance Minister Arun Jaitley while presenting the Union Budget 2015 has done well by stretching the 3% fiscal deficit planned to be achieved in the next two years to three years now.
In the absence of private sector’s capability to invest, it is the public investment that has to fill the gap as outlined in the Economic Survey tabled in Parliament on Friday.
While it is commendable that the government has managed to keep the fiscal deficit at the targeted 4.1% of GDP level, sticking to the earlier time-table for reducing the fiscal deficit would have not have been conducive for growth.
The new deadline and targets, therefore, of getting to the 3% level in FY18, with that of 3.9% in FY16 and 3.5% of GDP in FY17, is a good idea.
Better targeting of subsidies through Jan Dhan and direct benefit transfers will help in managing expenditure judiciously, and states now having more say in the utilization of their resources, will also help government in raising public expenditure to push growth.
With 8-8.5% GDP growth appearing quickly attainable under the new GDP series, the enhanced public investment will prepare a ground for the private investment to restart and take the GDP growth to the double digit.
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