Arvind Panagariya, Vice-Chairman of NITI Aayog has said good things about the economy of the country. Just a week before the Budget 2022, he said that the country’s economy has recovered to a great extent from the impact of Corona. He also expressed hope that the economic recovery will continue. He said that again we will return to the path of 7 to 8 per cent growth.
Panagariya is currently Professor of Economics at Columbia University, USA. He said on Tuesday that the Indian economy is returning to pre-Corona levels. Right now only private consumption is below the pre-corona level. Panagariya is also a famous economist. He said that recovery is visible in every sector of the economy.
He stressed on bringing down the fiscal deficit. He said that the government should give a signal to bring down the fiscal deficit. In the budget of the next financial year, the government can set a target to cut it by half to one percent. Finance Minister Nirmala Sitharaman will present the budget on February 1. This will be his fourth budget.
Due to the Corona epidemic, the fiscal deficit had increased to 9.5 percent in the financial year 2020-21. The government had set a target of bringing it to 6.8 per cent of GDP in the current financial year. On one hand the government had to increase the expenditure due to the Corona epidemic. On the other hand, their revenue decreased due to the closure of economic activities. This greatly increased the fiscal deficit.
Panagariya said that India’s economic growth rate is expected to be higher than other countries of the world. The Ministry of Statistics and Program Implementation (MoSPI) has projected India’s economic growth rate to be 9.2 percent in the financial year 2021-22 in its advance estimate. In the last financial year, the GDP had decreased by 7.3 percent. The reason for this was the impact of Korana on the economy.
Regarding the corona epidemic, Panagariya said that experts believe that a large part of the population has developed antibodies due to corona virus infection or vaccination. With this, there is more hope of this epidemic coming to an end gradually. He said that if this epidemic ends, then we can expect 7 to 8 percent growth to continue again.
While advising to keep the expenditure under control, Panagariya said that we should not spread our legs more than the sheet. Because this will increase the burden of debt on the next generation. On the rapidly rising inflation, he said in the US it is a cause for concern. There it has reached 7 percent, which is the highest in the last 40 years. He said that there is nothing to worry about inflation in India. It remains in the target range of 2 to 6 per cent.
Retail inflation in India rose to 5.59 per cent in December 2021. The reason for this was the rise in food prices. However, wholesale inflation is showing signs of moderation after four consecutive months. It was 13.56 per cent in December. Panagariya said that if the interest rate in the US increases, then emerging countries like India may draw some capital. But, this year will not be like 2013. In the year 2023, when America’s central bank started putting brakes on measures to increase liquidity in the system, capital started flowing out of emerging economy countries. This condition is called taper tantrum.
Responding to a question related to cryptocurrencies, Panagariya said that the government has never been successful in stopping hawala transactions. This is what will happen if we ban cryptocurrencies. So instead of banning it, we need to make a concrete policy to control it, he said. He said that for this, there is a need to make comprehensive rules and regulations so that instead of hiding its trading, it is properly reported.
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