New Delhi, April 8: Decrying the economic orthodoxy in India handed down from Europe of cutting fiscal deficits to balance budgets, Niti Aayog Vice Chairman Rajiv Kumar on Sunday called for new definitions to be adopted for government expenditure and described as fallacious the comparisions made between household and tiol budgets.
Speaking at industry chamber CII’s Annual Session 2018 here, Kumar also said the Niti Aayog, which has replaced the erstwhile Planning Commission, is currently working to design performance and outcome-based parameters for all budget items in order to improve the efficiency of public expenditure.
“I strongly believe that macro policy has to be counter-cyclical. When private investment is weak and jobs are needed, then the government has to step in (with investment),” said Kumar at a session titled “The Fiscal Conundrum”.
“It is sheer nonsense to compare household with government budgets, a trend that was started with (former British Prime Minister) Margaret Thatcher,” he said, explaining that the whole is always much more than the mere sum of individual parts.
“We need to think of the fiscal situation of the country as a whole and for all the levels of government including the local,” he said, adding, however, that it was important to maintain a “delicate fiscal balance” and governments should not engage in populist measures. “There is no reason for fiscal populism. It is to rein in politicians and governments taking populist measures that the FRBM (Fiscal Responsibility and Budget Magement) Act, 2003, came along,” Kumar said.
Presenting his last full budget in February before the general elections early in 2019, Fince Minister Arun Jaitley made a significant announcement of fiscal slippage with implications for pushing inflation, revising upwards the government’s fiscal deficit target for 2017-18 to 3.5 per cent of the GDP, or the equivalent of Rs 5.95 lakh crore.
The higher target came in place of the 3.2 per cent — or Rs 5.46 lakh crore — for the current fiscal announced earlier. In the budget, Jaitley also announced that the minimum support price (MSP) for notified kharif crops will be 1.5 times the input cost, and also stepped up total budgetary allocation for the sector for next fiscal by about 5 per cent. (IANS)