Rising trade deficit bigger cause for concern than a falling rupee: NITI

The country is obsessed with fiscal gap number and this obsession must end, says Rajiv Kumar

NITI Aayog vice chairman Rajiv Kumar on Tuesday said that rising trade deficit was a matter of greater ‘concern’ than falling rupee and the country needs to focus more on meeting its revenue deficit target than adhering to the fiscal deficit aim.

Addressing an event organised by CII, Kumar said that there is a constituency which benefits from strong rupee but it needs to be put on the back foot.

“I don’t believe in a strong rupee... It will be very difficult for the government to try and push up the rupee,”Kumar said.

“There is a constituency that benefits from a strong rupee...That constituency should be put on the back foot,” he said. The rupee had, on August 16, slumped to a life-time low of 70.32 on strong demand for the US dollar.

He said the country needs to shift its obsession with the fiscal gap number and that this “obsession must end”.

Government spending over the last four years has been a growth driver but the negative perception hasn't receded, which needs to change, he added.
 

He said that rural wages would not have grown if India had growth of joblessness over the last four years. 

“I don’t believe in a strong rupee... It will be very difficult for the government to try and push up 

the rupee” Rajiv Kumar, NITI Aayog vice chairman

Fiscal deficit in the first three months of the current financial year that started April 1 was at Rs4.29 trillion or 68.7 per cent of the government’s estimate for this fiscal, narrowing from 80.8 per cent of the Budget aim in the same period last fiscal.

Revenue deficit in the first fiscal quarter was at Rs3.53 trillion, which was 84.7 per cent of the FY19 estimate. 

He also suggested that India should not boast of being a big economy while negotiating trade deals given that the country’s per capita income is still low.
 

He said the Niti Aayog will soon come out with a development agenda for 'New India 2022'.

"We would like Planning Departments of state governments to work as state Niti Aayogs," he said.

Replying to a query, Kumar said nearly all states (excluding four) had signed a memorandum of understanding with the Centre for implementing the Ayushman Bharat Healthcare Scheme.

“I met West Bengal Chief Minister Mamata Banerjee; she is also willing to come on board,” he said.

New index in the offing to monitor deficit

The CII is planning to launch a new index to judge the quality of fiscal deficit in states and the Centre, starting from 2004-05. The index will be based on six parameters that include fiscal deficit, revenue deficit, revenue expenditure, capital expenditure, tax revenues and debt payment or servicing. The index, expected to be readied over next few months, will be finalised after extensive consultation with economists. “In these indicators, there are few perceived to be good for the quality of fiscal deficit, while others are not,” an official remarked.