NEW DELHI: Niti Aayog vice-chairman Rajiv Kumar has urged the industry to voice more support for a rational fiscal policy and not always seek fiscal consolidation.“I don’t see industry voice in support of rational fiscal policy, “Kumar said addressing a session on “The Fiscal Conundrum” at the annual session of the Confederation of Indian Industry (CII).Kumar has for a while favoured higher government spending to give a boost to the economy and has called for a greater focus on revenue deficit He said the fiscal policy needs to be counter cyclical to allow room for stimulus when the economy is not doing well. The Fiscal Responsibility and Budget Management Act (FRBM) has discouraged short-term populist measures and promoted fiscal discipline, he said, but borrowing that finances long-term capital expenditure should not cause concern.“If you keep revenue deficit to zero or to just above that, then you are not borrowing to consume,” he elaborated. “You must borrow to invest in productivity enhancing projects and investments, so that the rate of return on investments is more than the rate of inflation . That is the golden rule to follow.”In the budget presented on February 1, finance minister Arun Jaitley stretched the fiscal consolidation roadmap to a 3% fiscal deficit. Well, let us redefine revenue expenditure.

Source: Economic Times April 09, 2018 03:11 UTC