Arun Jaitley evades question on providing fiscal stimulus for boosting economy, says ‘no need to panic’

There is an increased speculation over a possible fiscal stimulus which can go above Rs 40,000 crore after six successive quarters of dip in the economic growth, which slid to 3-year low of 5.7 per cent in the April-June quarter.

However, increasing public spending comes with the threat of stoking inflation and breaching the fiscal deficit commitments, something which the rating agencies are not very comfortable with.

Stating that the world must be “rest assured” about India, Jaitley said the answer to the challenge lies in balancing the conflicting aspects. “We are all conscious of the fact that there is a value and an importance of the kind of prudence that is required in an economy, we are a responsible economy.

“At the same time, we also are conscious in such situations of spending. Obviously, the real answer lies in finding the balance between the two. The balance lies in finding the resources to do the same,” he said.

“I don’t think there is a need for panic. There’s a need for analysis and for responsive action to this and we are fully prepared for this,” he added. Under the revised fiscal responsibility roadmap, the government is committed to getting the fiscal deficit to 3.2 per cent in 2017-18 but reserves the right to push it by 0.5 per cent in case of demanding circumstances.

Niti Aayog chief executive Amitabh Kant, who was also at the event, said the states need to be very astute in their financial management. Kant also suggested looking at the quality of fiscal deficit and focusing on pushing exports, bank recapitalisation and projects at the last stage of completion.