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Infuse capital in economy without worrying about fiscal deficit: FICCI to government

NEW DELHI: The government should infuse capital in the economy without worrying about the fiscal deficit target as the GDP growth is estimated to slip to 11-year low of 5 per cent during 2019-20, Industry body Ficci said on Wednesday.

In a statement, Ficci President Sangita Reddy said the 5 per cent GDP growth estimate for the current financial year is on expected lines as the economic expansion in the first half of the year has been moderate.

“We hope to see some momentum in the latter part. In fact, there are nascent signs that point towards improvement and we need to make sure that these find a more solid footing going ahead,” she said.

Observing that the nature of the economy is cyclical, she said it was more important to infuse more capital to re-energise it than worrying about fiscal deficit.

A time-bound plan must be put in place on the mechanics to repair fiscal deficit through different measures, including disinvestment in PSUs, added Reddy.

“Ficci is of the view that the fiscal deficit target could be relaxed to support infusion of Rs 1.5-2 lakh crore in the economy in the coming year, as such fiscal expansion is much needed at the current juncture to give a boost to demand and trigger investments,” the chamber president said.

The government aims to restrict the fiscal deficit to 3.3 per cent of the GDP for the financial year ending March 2020.

Referring to the forthcoming Union Budget 2020-21, she said the chamber look forward to government continuing taking steps towards bridging the existing gaps and giving out positive signals to boost the sentiment, consumption and investments.

Apart from providing cheaper loans, more efforts must be made to increase incomes, especially in the rural areas, she suggested.

“This can be achieved through an increase in the quantum of income support under PM-KISAN and expansion of the Direct Benefit Transfer scheme. Steps are also required to boost construction, infrastructure and exports,” Reddy said.

The industry body is also of the view that a significant focus on the economies of the future technologies like artificial intelligence, along with added stress on science and innovation, are also critical to add a parallel wave of growth, the statement said.