Govt may breach fiscal deficit target; need for stimulus rises: Report

The government has set a 3.3 per cent fiscal deficit target for the current fiscal.

The government might breach the fiscal deficit target this financial year amid drop in the revenue mobilisation and expected additional expenditure by the government, says a report. According to Dun & Bradstreet’s Economy Forecast, the need for fiscal stimulus has increased even as the government finances remain “strained”.

“We expect that the drop in the revenue mobilisation of the government and likelihood of additional expenditure by the government might breach the fiscal deficit target in FY20,” Dun & Bradstreet India Chief Economist Arun Singh said. The government has set a 3.3 per cent fiscal deficit target for the current fiscal.

Singh further added that given the resources constraints, increase in fiscal deficit might lead to crowding out of private investments. According to the report, corporate liabilities are already higher. The balance-sheets of corporates, government, banks and households remain constrained or weak and revenue collection will play an important role.

“Revenue collection will thus be important for the government to implement a fiscal stimulus. To do that, tax reforms are needed. GST should be simplified further, and direct tax collections should increase,” Singh said. As per the report, the index of industrial production is likely to remain subdued in the short to medium term amid slowdown in demand, lackluster investment and weak exports….

PM Narendra Modi joked that media trying to trap me: Abhijit Banerjee

Prime Minister calls meeting with Abhijit Banerjee excellent; professor thanks Modi for unique experience

Abhijit Banerjee, this year’s Indian-born Economics Nobel Laureate, met Prime Minister (PM) Narendra Modi on Tuesday morning. Soon after, Modi tweeted that it was an excellent meeting and that “India is proud of his accomplishments”. Banerjee shared the Nobel with co-researchers Esther Duflo, who he’s married to, and Michael Kremer. Duflo, the youngest Economics Nobel winner, wasn’t present at the meeting with the PM.

“Excellent meeting with Nobel Laureate Abhijit Banerjee. His passion towards human empowerment is clearly visible. We had a healthy and extensive interaction on various subjects. India is proud of his accomplishments. Wishing him the very best for his future endeavours,” the PM wrote on his personal Twitter handle, @narendramodi.

Banerjee was prompt to thank the PM, though not on social media. Speaking to the media later, he said, “Thank you, PM… that was a unique experience.” Responding to how the conversation with Modi had gone, Banerjee laughingly quipped he wouldn’t get into any controversial subject as he had been warned by the PM. But, the professor spilled the beans by saying the PM had started the conversation by cracking a joke on how the media was trying to trap him to say “anti-Modi things”. He went on to say, “The PM has been watching TV and watching you guys. And he knows what you are trying to do.”

On a more serious note, Banerjee described the meeting with Modi as “cordial” and “good”. “The PM was kind enough to give me quite a lot of time and to talk a lot about his way of thinking about India, that was unique,” he said. He added that while “one hears about policies, one rarely hears about the thinking behind them”…