New Delhi: With the 2019-2020 GDP growth rate projected to fall to 5 per cent, industry body Ficci Wednesday suggested relaxing the fiscal deficit target as a measure to boost demand, saying infusion of capital into the economy is imperative to boost growth.
Ficci President Sangita Reddy said that with the advance GDP estimates projecting the current fiscal’s GDP growth at 5 per cent, it is a necessity now for the government to look at measures to infuse capital into the economy in a systematic way.
On Tuesday, the Central Statistics Office (CSO) pegged the 2019-20 growth at an 11 year low of 5 per cent.
“The GDP growth estimate for the current financial year of 5 per cent is on expected lines. The growth during the first half of the year has been moderate and we hope to see some momentum in the latter part. In fact, there are nascent signs that point towards an improvement and we need to make sure that these find a more solid footing going ahead,” Reddy said.
“The Ficci is of the view that the fiscal deficit target could be relaxed to support infusion of Rs 1.5-2 lakh crore in the economy in the coming year, as such fiscal expansion is much needed at the current juncture to give a boost to demand and trigger investments,” she said.
“The nature of the economy is cyclical and when a potential recessionary cycle is foreseen, move to induct more capital into the economy to re-energize it is more important than worrying about fiscal deficit. A time-bound plan must be put in place on the mechanics to repair fiscal deficit through different measures, including disinvestment in PSUs,” she added.
According to the Ficci President, the “Union Budget 2020-21 is to be announced soon and we look forward to government continuing taking steps towards bridging the existing gaps and giving out positive signals to boost the sentiment, consumption and investments. Apart from providing cheaper loans, more efforts must be made to increase incomes, especially in the rural areas. Steps are also required to boost construction, infrastructure and exports.
“Ficci is also of the view that a significant focus on the economies of the future technologies like artificial intelligence, along with added stress on science and innovation, are also critical to add a parallel wave of growth,” she added.
Reddy also said that the government must enable reforms, which will enable ease of doing business for sustaining growth and demand. She noted that a survey is being conducted by Ficci across industries to assess the countrywide sentiment and what it would take for corporate India to re-energize itself.