In an exclusive interview with CNBC-TV18 the Chief Economic Adviser (CEA) Krishnamurthy V Subramanian said that he expects the full year’s GDP in the double-digits. The CEA mentioned that the government of India wants to spend the money in the best possible way, given that capital expenditure in the country had increased by 14.8 per cent year-on-year. “Just because rev (revenue) position is better, we aren’t going to splurge like there is no tomorrow,” said Subramanian in the interview with CNBC-TV18.
He said that his figures indicated a growth of the Government Capex by 14 per cent to 1.28 lakh crore. The expenditure run rate was one-fourth, which he stated was exactly what we needed. This comes after the expenditure projections made in the budget despite the Covid-19 restrictions.
Subramanian told CNBC-TV18, “Fiscal deficit is lower due to Rs 5 lakh crore additional revenues. I don’t read these numbers as a caution; I will continue to meet budget targets. The key focus is to ensure spending is well directed to get bang for the buck. The cushion provided by additional revenues is being used for investment. We have to be prudent in where we want to put the money despite higher revenues.”
Talking about the expectations for the inflation rate, he expressed that he expected the inflation to stay between 5 to 6 per cent till December. “I think policy has played out well on the inflation front. Revenue Expenditure and Capex are as projected in the Budget,” added the CEA in the interview with CNBC-TV18.
On Tuesday, the CEA had talked about India’s macroeconomic fundamentals, which he claimed were stronger and that the country was set for robust growth on the back of structural reforms. He had said that the GDP data for the first quarter reaffirms the government’s predictions of a soon-to-come ‘V-shaped recovery’ made last year. His inputs come after the release of the numbers for the April-June quarter.
In the first quarter of this fiscal, the country saw the economic growth move upwards to 20.1 per cent. This was against a GDP contraction of 24.4 per cent in the April-June quarter of 2020-21. The growth seen in the first quarter put India in the category of one of the fastest-growing economies in the world. However, India’s GDP constant price in the first quarter of 2019-20, which stood at Rs 35.66 lakh crore indicated that the country was still to fully recover from the slumps brought on by the pandemic.
In response to the vaccination drives in India, Subramanian told CNBC-TV18, “By December, I anticipate a large section of the population to have 2nd dose.” This could indicate the beginning of increased growth in the economy as vaccination rates increase.