India's macroeconomic fundamentals remain strong: Arun Jaitley

Says India has been fastest-growing major economy for last three years

Finance Minister Arun Jaitley’s press conference on Tuesday, to announce a new bank recapitalisation programme, was also an image building exercise, coming at a time when the government is being criticised for its handling of the economy after demonetisation and goods and service tax and with growth slipping to its lowest in Narendra Modi’s tenure.

Jaitley said at the briefing India’s macroeconomic fundamentals remained strong, that it has been the fastest-growing major economy for the last three years and the Centre’s attempt is to maintain high growth rate in the coming years.

Three of Jaitley’s top bureaucrats, namely Finance Secretary Ashok Lavasa, Economic Affairs Secretary Subhash Garg, and Financial Services Secretary Rajiv Kumar gave detailed presentations. Garg said that Consumer-Price Index based inflation will not cross 4% in fiscal years 2017-18, and that current account deficit will be less than 2% this year. Garg also said that the government is confident of surpassing the ambitious disinvestment target of Rs 72,500 crore for this fiscal year.

On fiscal deficit, he said the government is committed to sticking to the target of 3.2% of GDP for the current fiscal year but reiterated that the government would take a relook in December. In late September, Garg had said that the government would reassess its borrowing programme in December, which raises the possibility of higher-than-budgeted spending by the Centre, and a fiscal expansion if corresponding revenues are not realised.

Senior ministers and bureaucrats have held a number of meetings over the past few months on ways to revive economic growth. There have been talks in the government regarding a possible stimulus package through higher capital spending to boost manufacturing and infrastructure and to create jobs. Apart from the Rs 2.11 lakh crore bank recapitalisation programme announced on Tuesday, Jaitley has also told state-owned companies to spend an additional Rs 25,000 crore in capital expenditure.

Finance Secretary Ashok Lavasa said that total government expenditure so far this fiscal year has been Rs 11.47 lakh crore out of Rs 21.46 lakh crore budgeted for this financial year. Out of capital expenditure target of Rs 3.09 lakh crore, Rs 1.46 lakh crore has already been spent. Central public sector units have spent an additional Rs 1.37 lakh crore out of their target of Rs 3.85 lakh crore.