The Prime Minister’s Economic Advisory Council (EAC) on Friday advised the government to address challenges in the agricultural sector, support employment programmes and continue its emphasis on social sector interventions without losing focus on the fiscal consolidation target, according to a statement issued by the panel. The advice came a week ahead of the presentation of the interim budget in Parliament.
The council’s advice came at a time when the Bharatiya Janata Party-led central government is under tremendous political pressure to take some concrete steps to ease the debt burdens of small and marginal farmers in the light of the 2019 general elections. Minister of state for agriculture Parshottam Rupala had said on Thursday that the government would soon announce a package for farmers to boost their income.
The EAC has, however, suggested that “there should be no deviation from the fiscal consolidation target”. The government must continue its emphasis on social sector interventions, an official statement issued by the council said.
The government has a target to tame the fiscal deficit at 3.3% of GDP in 2018-19 as compared to 3.5% in 2017-18. According to latest official data, the country’s fiscal deficit in April-November 2018 already exceeded Rs 92,349 crore — about 15% more than the budget estimate of Rs 6,24,276 crore for the current financial year.
According to economists, any largesse may, however, have an adverse impact on the country’s fiscal discipline.
Ranen Banerjee, PwC India Leader (Public Finance & Economics) said, the EAC’s advice is that the government should be cautious while announcing sops ahead of the interim budget. “The council gives a hint that the government’s social sector interventions should strike a judicious balance with available resources,” he said. “The signal is, you don’t do something that would detail the economy from the fiscal consolidation roadmap. If the government gives subsidy in lieu of some of the existing schemes, it will not raise fiscal deficit abnormally,” Banerjee said.
Stating that the macro-economic fundamentals of the country are “sound”, the council pointed at some global developments that could impact the Indian economy. “While the prospects for world economic growth does not look very promising, particularly in the advanced economies, there is sufficient amount of growth momentum in emerging market economies. India is not insulated from global developments,” it said.
The council is, however, confident about the faster growth of the Indian economy.
First Published: Jan 25, 2019 23:10 IST
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