BJP in favour of an expansionary economic policy

NEW DELHI : The ruling Bharatiya Janata Party (BJP) is in favour of an expansionary economic policy and does not consider the government’s plan to keep the fiscal deficit to 3.3% of GDP as “sacrosanct”, a party spokesman told Reuters.

Ahead of a general election that must be held by May and after a string of losses in recent state polls, the government has announced several stimulus measures for the countryside where millions of farmers are grappling with low crop prices. Other fiscal moves have been aimed at helping small businesses. The measures are likely to be a drain on India’s finances.

“There’s a demand, there’s a debate—all my colleagues are saying what’s the need of keeping the fiscal deficit in check when there is a distress in a particular sector,” said Gopal Krishna Agarwal, the economic affairs spokesman for BJP, referring to the farm sector.

“Even think-tanks associated with us are talking in this sense. Very few people domestically are talking about fiscal prudence. I strongly believe an expansionary policy can benefit the party,” he said. India’s 10-year benchmark bond yield rose 4 basis points to 7.53 percent after the news, its highest since January 8 on worries about the fiscal deficit. The rupee also weakened to 71.23 to the dollar from its previous close of 71.03.

Agarwal, a chartered accountant who is a director at state-run Bank of Baroda and a member of a government committee on small and medium-sized businesses, said Modi was aware of his party colleagues’ thinking but that no final decision had been taken. D S Malik, a spokesman for the ministry of finance, did not respond to calls and emails seeking comment.