New Delhi: Chief Economic Advisor (CEA) K. Subramanian Thursday said the Indian economy does not need a fiscal stimulus to tackle the ongoing economic slowdown.
Speaking at the Hero Mindmine Summit that brings together industry and government to discuss economic policy, Subramanian said policymakers need to be careful while deciding on any fiscal stimulus as a way to boost economic growth.
“We can’t expect the government to intervene every time some sectors go through sunset. Not all sectors are doing bad, some are doing well,” the CEA said. In his address at the event, former Finance Secretary Subhash Chandra Garg echoed the CEA’s views that there is no necessity of a fiscal stimulus for the economny at this juncture.
Garg also said the country’s gross domestic product (GDP) growth during the first quarter of the current fiscal could be in the range of 5.5-5.6 per cent. The GDP growth in the fourth quarter of the last fiscal came in at 5.8 per cent caused by slowdown in key sectors like agriculture, manufacturing and industry.
Garg’s assessment is important as he was the Finance Secretary till July this year and was the top bureaucrat in the ministry during most of the current slowdown that began last fiscal. The former Finance Secretary also suggested bringing down interest rates rather than giving any stimulus to the economy, adding that the recent surge in bond rates would hurt industry even more.
Garg also said there is no global recession at present. The CEA said the Insolvency and Bankruptcy Code (IBC) has helped cut state-run banks’ non-performing assets (NPAs or bad loans) by Rs 3 lakh crore, while capital budgeting has to be undertaken carefully.