There is no harm in relaxing the fiscal deficit target to allow for more capital expenditure in order to lift the slowing Indian economy, Niti Aayog Vice Chairman Rajiv Kumar told Reuters on Wednesday. The extra fiscal stimulus will help the economy do well, he said. Kumar took over as the vice chairman of the policy think-tank on September 1.
For the 2017-’18 financial year, the government has decided on a fiscal deficit target of 3.2% of the Gross Domestic Product, and 3% for the next three years.
On September 21, Reuters had reported that the government might consider a plan to loosen the fiscal deficit target for the current financial year. This could enable the Centre to spend an additional Rs 50,000 crore to revive the economy, two unidentified government officials had told the news agency.
Last week, Union Finance Minister Arun Jaitley had also said that the government was looking for ways to boost economic growth, which reached a three-year low of 5.7% in the quarter that ended in June.
Jaitley, without divulging details, had said the government would unveil the necessary steps once Prime Minister Narendra Modi signs off on them. “We have taken note of all economic indicators available,” Jaitley said after holding meetings with his Cabinet colleagues and other government officials.