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Jaitley’s comments come against the background also co-opt some state governments to work
of the most serious economic challenge the towards this objective.”
government has faced since it came to power in
2014. The government is already at 92% of its full-year
fiscal deficit target in the first four months (April-
India’s gross domestic product (GDP) growth July) of 2017-18 and may find it difficult to spend
slowed to 5.7% in the quarter ended June, the beyond its budgetary means this fiscal, Srivastava
slowest in three years, from 6.1% in the preceding added.
three months, sparking concern over the state of
the economy.The residual impact of the November Low oil prices have helped the government,
invalidation of high-value banknotes and the July which has not reduced the retail price of petrol
1 implementation of the goods and services tax and diesel, instead increasing levies on fuel.
(GST) were seen as contributing factors. Current It has used this money to balance the fisc and
account deficit at a four-year high (2.4% of GDP spend on development programmes—a sound
in Q1 FY18) and rising retail inflation have further macroeconomic move, according to many
exacerbated the macroeconomic situation. economists.
On Tuesday, Jaitley chaired a meeting to discuss Still, a recent increase in oil prices, coming in the
the situation and find solutions to the problem. wake of weak economic data, has resulted in a
The meeting was attended by railway minister wave of criticism being directed at the government.
Piyush Goyal, commerce and industry minister It doesn’t help that the Bharatiya Janata Party had
Suresh Prabhu and the secretaries of the finance made fuel prices a big issue when the Congress-
and commerce and industry ministries. The led United Progressive Alliance was in power.
railway board chairman and representatives
from the Prime Minister’s Office and NITI Aayog, Jaitley defended the levies on fuel.
the government’s policy think tank, were also in
attendance. “Funds for public investment are coming from
resources such as excise duty on petrol and diesel.
Jaitley said the measures would be announced Public investment has become the foundation
soon, after consulting Prime Minister Narendra of growth at a time when private investment
Modi. is low. Cutting those investments would mean
cutting down allocations for social sector and
There has been speculation that the revival infrastructure schemes,” he said.
package could include incentives for exporters,
fiscal sops and investments in large infrastructure (Source: http://www.hindustantimes.com/india-news/govt-
projects. Reviving economic growth and creating will-announce-additional-measures-to-boost-economic-
more jobs, promises that the ruling Bharatiya growth-arun-jaitley/story-BN0NNHLU8oaqEtJt6mPKAP.html
Janata Party made to come to power in 2014, are dated 20th September-201&)
crucial as the party seeks re-election in 2019.
DK Srivastava, chief policy adviser at EY India,
said the government may announce fiscally
expansionary programmes without breaching
the 3.2% (of GDP) fiscal deficit target for 2017-18.
“Public and departmental enterprises that can
spend on infrastructure may be asked to speed
up and enhance their capex (capital expenditure)
plans for the year. The central government may
August-September-2017 54
