Reviving growth: It’s time for Narendra Modi govt to spend; fiscal deficit is not a holy cow

The government indicated on Wednesday that it might come up with a booster shot for the economy, with the focus on reviving a few sectors.The GDP growth rate had fallen to a three-year low of 5.7% in April-June quarter. There are clear indications of an economic slowdown caused by weak private investment, which in turn has slowed down job creation.

Finance minister, Arun Jaitley said, “the government will take additional measures in the coming days after consulting PM.” Arun Jaitley almost ruled out cuts in taxes on petrol and diesel, arguing that the government needed funds to meet its spending requirements. Besides, in his assessment, the price spike is temporary.

The finance minister’s job is never an easy one. For Arun Jaitley, the situation is extra tough. His more-than-broad hint that the government is readying for a growth stimulus came not a day soon. Hours after Jaitley’s statement, the US Fed officially signalled the definitive end of a nearly decade-long easy monetary policy by announcing an imminent reversing of bond buying. We are living in a global economy where when the US sneezes, the world catches a cold. An ease of foreign fund inflows into the Indian market may only be a sobering signal from outside compounding a domestic malaise.

(Gaurav Kumar, The Newsroom Agenda)

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