The Indian government has been very responsible fiscally over the past few years and the practice of setting out specific fiscal deficit targets should be done away with in favour of adopting a deficit range, said Bimal Jalan, former RBI chief and head of the government's Expenditure Management Condition.
In an interview with CNBC-TV18's Sapna Das, Jalan also spoke about the current fiscal's deficit target, and weighed in on whether the government can afford to miss it.
Below is the verbatim transcript of Bimal Jalan’s interview with Sapna Das on CNBC-TV18.
Q: How do you weigh in on the ongoing fiscal deficit target debate?A: Our fiscal responsibility has been extremely good if you see in the past few years. The government has announced these but I also believe that now, the FRBM after 2016-2017, we must be fiscally responsible and we must manage our expenditure to the best of our ability but we don’t have to legislate a target; it has to be within a range.
For example, if there is a drought then we need more expenditure, if we want to increase capital investment where implementation is normally over a period of time. So, whatever we can do to provide these services, we should.
Q: A lot of talk about 2016-2017 target, what is your take on that, I am asking for your personal view on that front?
A: 2016-2017 target is within range. I am sure that we will achieve it but whether it is 0.1 percent here or 0.2 there, I don’t attach any importance to that because just look at our fundamentals at the moment, inflation is low, reserves are high. Even if with the global uncertainty -- where a lot of things happening globally are not in our favour -- our trade portion of gross domestic product (GDP) is relatively small and our GDP is supposed to be doing better in the next year.
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