Arun Jaitley likely to take the stimulus route to economic growth

Finance Minister Arun Jaitley may significantly increase public investment in infrastructure in the Budget 2017, offering fiscal stimulus to boost economic growth at a time when private investment shows no signs of a pick-up.

Last year, chief economic adviser in the finance ministry Arvind Subramanian advocated a stimulus, but the minister decided to stick to the fiscal deficit target of 3.5 per cent of the GDP, fearing a backlash from investors and rating agencies.

“Different schools of thought have argued either in favour of fiscal consolidation and stability or for a less aggressive consolidation and for boosting growth. I have weighed the policy options and decided that prudence lies in adhering to the fiscal targets,” Jaitley said in his budget speech last year.

Investment demand in the economy is expected to contract in 2016-17 by 0.2 per cent from 3.9 per cent growth in 2015-16, according to data released by the government’s statistics department earlier this month, reported Livemint.