Difficult to achieve fiscal deficit target: Rangarajan

Prime Minister's Economic Advisory Council (PMEAC) Chairman today said the government was likely to miss the fiscal deficit target of 4.6% for the current fiscal as growth was expected to moderate.

"In the current year, the budgeted fiscal deficit is 4.6% [of GDP]. It is going to be difficult to achieve this. All the numbers do not gel well," he said, while delivering lecture at golden jubilee celebration of Indian Economic Service here.

"But I think it should be one of efforts to ensure that fiscal deficit is in the lines of what was estimated," he said.

The economic growth was earlier estimated at 8.2% for the current fiscal.

Despite a stronger agricultural growth than what was estimated earlier, he said the economy was expected to grow about 8% during the current fiscal as there were serious concerns.

"Therefore, taking all these factors into account, I believe the growth rate of the economy can be close to 8% a year," he said.

He said the potential growth rate of was 9% given the saving and investment rate.

Highlighting the challenges, Rangaranjan said, "I believe there are short-term concerns and medium-term constraints which will come in the way of achieving 9% growth."

There are three short-term constraints -- one is inflation, the second is balance of payment and the third area is fiscal consolidation.

On rate of price rise, he said, "I believe even if inflation is triggered by supply side constraint monetary policy has important role to play."

When food inflation persist for some time then it gets generalised, he said, "In fact today the non-food manufacturing index exceed 7.5%. Therefore, we should be using monetary policy to tame inflationary expectations."

Defending the number of rate hikes effected by the Reserve Bank, he said, "We should use monetary policy in way that demand preference is brought down."

Since March 2010, the central bank has raised policy rate 12 times to tame inflation.

On the Current Account Deficit (CAD), he said, "I don't think that by taking both imports and exports of goods and services taken together we might exceed 2.5% of of the CAD this year."

image
Business Standard
177 22
Business Standard

Difficult to achieve fiscal deficit target: Rangarajan

Press Trust of India  |  New Delhi 



C Rangarajan

Prime Minister's Economic Advisory Council (PMEAC) Chairman today said the government was likely to miss the fiscal deficit target of 4.6% for the current fiscal as growth was expected to moderate.

"In the current year, the budgeted fiscal deficit is 4.6% [of GDP]. It is going to be difficult to achieve this. All the numbers do not gel well," he said, while delivering lecture at golden jubilee celebration of Indian Economic Service here.

"But I think it should be one of efforts to ensure that fiscal deficit is in the lines of what was estimated," he said.

The economic growth was earlier estimated at 8.2% for the current fiscal.

Despite a stronger agricultural growth than what was estimated earlier, he said the economy was expected to grow about 8% during the current fiscal as there were serious concerns.

"Therefore, taking all these factors into account, I believe the growth rate of the economy can be close to 8% a year," he said.

He said the potential growth rate of was 9% given the saving and investment rate.

Highlighting the challenges, Rangaranjan said, "I believe there are short-term concerns and medium-term constraints which will come in the way of achieving 9% growth."

There are three short-term constraints -- one is inflation, the second is balance of payment and the third area is fiscal consolidation.

On rate of price rise, he said, "I believe even if inflation is triggered by supply side constraint monetary policy has important role to play."

When food inflation persist for some time then it gets generalised, he said, "In fact today the non-food manufacturing index exceed 7.5%. Therefore, we should be using monetary policy to tame inflationary expectations."

Defending the number of rate hikes effected by the Reserve Bank, he said, "We should use monetary policy in way that demand preference is brought down."

Since March 2010, the central bank has raised policy rate 12 times to tame inflation.

On the Current Account Deficit (CAD), he said, "I don't think that by taking both imports and exports of goods and services taken together we might exceed 2.5% of of the CAD this year."

RECOMMENDED FOR YOU

Difficult to achieve fiscal deficit target: Rangarajan

Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan today said the government was likely to miss the fiscal deficit target of 4.6% for the current fiscal as growth was expected to moderate.

Prime Minister's Economic Advisory Council (PMEAC) Chairman today said the government was likely to miss the fiscal deficit target of 4.6% for the current fiscal as growth was expected to moderate.

"In the current year, the budgeted fiscal deficit is 4.6% [of GDP]. It is going to be difficult to achieve this. All the numbers do not gel well," he said, while delivering lecture at golden jubilee celebration of Indian Economic Service here.

"But I think it should be one of efforts to ensure that fiscal deficit is in the lines of what was estimated," he said.

The economic growth was earlier estimated at 8.2% for the current fiscal.

Despite a stronger agricultural growth than what was estimated earlier, he said the economy was expected to grow about 8% during the current fiscal as there were serious concerns.

"Therefore, taking all these factors into account, I believe the growth rate of the economy can be close to 8% a year," he said.

He said the potential growth rate of was 9% given the saving and investment rate.

Highlighting the challenges, Rangaranjan said, "I believe there are short-term concerns and medium-term constraints which will come in the way of achieving 9% growth."

There are three short-term constraints -- one is inflation, the second is balance of payment and the third area is fiscal consolidation.

On rate of price rise, he said, "I believe even if inflation is triggered by supply side constraint monetary policy has important role to play."

When food inflation persist for some time then it gets generalised, he said, "In fact today the non-food manufacturing index exceed 7.5%. Therefore, we should be using monetary policy to tame inflationary expectations."

Defending the number of rate hikes effected by the Reserve Bank, he said, "We should use monetary policy in way that demand preference is brought down."

Since March 2010, the central bank has raised policy rate 12 times to tame inflation.

On the Current Account Deficit (CAD), he said, "I don't think that by taking both imports and exports of goods and services taken together we might exceed 2.5% of of the CAD this year."

image
Business Standard
177 22

More News

  • Photo: Wikipedia Centre to set up fodder farms in districts
  • People rest next to stacked sacks of onions at a wholesale vegetable market in New Delhi Maharashtra govt proposes subsidy for onion farmers
Widgets Magazine

Widgets Magazine

Upgrade To Premium Services

Welcome User

Business Standard is happy to inform you of the launch of "Business Standard Premium Services"

As a premium subscriber you get an across device unfettered access to a range of services which include:

  • Access Exclusive content - articles, features & opinion pieces
  • Weekly Industry/Genre specific newsletters - Choose multiple industries/genres
  • Access to 17 plus years of content archives
  • Set Stock price alerts for your portfolio and watch list and get them delivered to your e-mail box
  • End of day news alerts on 5 companies (via email)
  • NEW: Get seamless access to WSJ.com at a great price. No additional sign-up required.
 

Premium Services

In Partnership with

 

Dear Guest,

 

Welcome to the premium services of Business Standard brought to you courtesy FIS.
Kindly visit the Manage my subscription page to discover the benefits of this programme.

Enjoy Reading!
Team Business Standard