Modi’s advisory panel says India must stick to fiscal goal
India’s Prime Minister Narendra Modi’s economic advisors warned against any relaxation in the budget deficit goal as pressure builds on the government to boost spending and revive growth.
“There is a consensus that the fiscal consolidation exercise shouldn’t be deviated from,” Bibek Debroy, chairman of the Prime Minister’s economic advisory council, said on Wednesday after its first meeting in New Delhi.
Modi faces the challenge of narrowing one of Asia’s widest budget deficits while reviving an economy that slowed in the June quarter to a level last seen in 2014. The International Monetary Fund lowered India’s 2017 gross domestic product forecast by 0.5 percentage points to 6.7 per cent on Tuesday.
India’s goal is to curb its budget deficit to a ten-year low of 3.2 per cent of gross domestic product in the year ending March, however large government spending to bolster growth could put this target in doubt and risk a cut in sovereign ratings.
The panel of experts advising Modi has shortlisted ten issues including economic growth, fiscal framework, job growth and monetary policy to work on. It will focus on critical interventions related to accelerating activity and employment over the next few months, it said in a statement.