Slowing economic growth, lack of fiscal space will challenge next govt

Slowing economic growth and lack of fiscal space to boost it would be the main concerns of the next government. Economic growth is officially projected to come down to 7 per cent in 2018-19. 

Boosting private investments would be the key to spur growth, for which also the government has to rein in its fiscal deficit so that resources are not crowded out. The interim Budget had pegged the fiscal deficit at 3.2 per cent of the GDP for 2019-20, higher than the original goal of 3 per cent.

One has to watch the first Budget of the next government to see the number. Already, there are concerns relating to ambitious projections of revenues, especially direct tax ones. Building pressure on food inflation would be another worry with wholesale food inflation touching 7 per cent in April. Good rains can help rein in inflation, which is also essential for the RBI to cut rates to boost the economy.