As the Indian economy grew by 20.1 percent on a low base in Q1FY22, Chief Economic Advisor Krishnamurthy Subramanian on Tuesday said the figures are indicative of economic recovery.
"Q1 GDP reaffirms the government's prediction of an imminent V-shaped recovery," Subramanian said, adding that India's economic fundamentals are much better now and it is expected that the economy will be in a very good position to withstand taper tantrum.
In an exclusive interview with Shereen Bhan and Latha Venkatesh, Krishnamurthy Subramanian, Chief Economic Adviser said fiscal deficit is lower because of Rs 5 lakh crore additional revenue that has come in. He highlighted that governments focus is to ensure spending is well directed to get bank for the buck.
"The fiscal deficit is lower because Rs 5 lakh crore additional revenue has come and that is the primary reason why the fiscal deficit is lower. So I do not read that as caution, I read that as us following what we projected in the Budget for both capital expenditure and revenue expenditure. One of the key aspects that we have focused on is to ensure that the spending is well-directed. The reason our macro fundamentals are looking so good now is because we have not spent just because there is money to spend, it has to be well directed so that it generates a bank for the buck."
He expects inflation to stay between 5-6 percent till December.
"I expect going forward up until the month of December inflation to stay between 5-6 percent. Compared to the global financial crisis period when inflation was in double digits, we now have inflation at 6.1 percent over the last one year. So we have to keep these aspects in mind because the counterfactual is this is all because of the supply side measures that have been taken. In the global financial crisis response was only demand driven, no supply side measures and that is why you had double digit inflation but now because of the supply side measures, despite the lockdowns, we have kept inflation between 5-6 percent. So I do think that the policy has really played out the way we would expect it to on the inflation front."
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