India has scope to boost Budget without stoking inflation, says economist

Gupta's view runs counter to the argument of RBI's outgoing Deputy Governor Viral Acharya, who recently warned of inflation risks coming from rising government and public sector borrowings

The government can offer fiscal stimulus to support economic growth in its Budget next week without worrying about it being inflationary.

That’s according to Kapil Gupta, an economist with Edelweiss Securities Ltd. in Mumbai, who says a weakening economy and a possible US interest rate cut provide scope for India’s authorities to lift spending. Such a move wouldn’t undermine inflation goals either, he said, citing historical evidence and, besides, consumer prices are more tied to what happens to food costs.

Gupta’s view runs counter to the argument of Reserve Bank of India’s outgoing Deputy Governor Viral Acharya, who recently warned of inflation