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Letter to BS: Onus on govt as economic slowdown is deeper than anticipated

When private spending is not picking up, it is the government that ought to spend higher to boost demand

Business Standard  |  New Delhi 

Economists paint a grim picture, lower India's FY20 GDP growth forecast

This refers to “GDP growth slips to 4.5%” (November 30). The Q2 growth at 4.5 per cent, lowest in 26 quarters has firmed up the that slowdown in the economy is more deep-rooted than anticipated and is not going to go away anytime soon.

Manufacturing activity has shown contraction in Q2, thereby becoming the prime factor behind this abysmal growth figure. The only silver lining in the figures released for the second quarter is that government consumption expenditure has risen significantly. But given the slowdown, government spending needs to go even higher.

When private spending is not picking up, it is the government that ought to spend higher to boost demand which will push growth in the manufacturing sector. Though higher fiscal deficit is a concern, the government needs to do a balancing act, that is, increase expenditure even at the cost of some rise in the fiscal deficit.

The stimulus measures announced by the government over last few months would certainly bear fruit, but a quarter is too short a period to observe the changes.

Sanjeev Kumar Singh, Jabalpur


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First Published: Mon, December 02 2019. 22:23 IST
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