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Fiscal deficit not a huge cause of concern for India, says Lucy Macdonald of Allianz Global Investors

Updated : July 02, 2019 06:20 PM IST

The fiscal deficit is not a huge cause of concern for the Indian government, said Lucy Macdonald, CIO of Global Equities, Allianz Global Investors on Tuesday.

The government's fiscal deficit touched 52 percent of the budget estimate for the full year in the first two months of 2019-20. In absolute terms, the fiscal deficit or gap between expenditure and revenue, was Rs 3,66,157 crore, as per the latest data released by the Controller General of Accounts (CGA). The fiscal deficit was 55.3 percent of 2018-19 budget estimate in the year-ago period.

In the Interim Budget passed in February, the government had estimated the fiscal deficit at Rs 7.03 lakh crore for 2019-20. The government aims to restrict the fiscal deficit at 3.4 percent of the GDP during the current fiscal, same as the last financial year.

“The deficit, in the international context, is within a range. So not a huge cause of concern," said Macdonald in an interview with CNBC-TV18.

“We are looking to see how the spending develops now that the election is out of the way and particularly as the economy is slowing down in India both from the domestic and exports,” she said.

"Some help is clearly needed to support both from the monetary side and from the budget as well," she added.

“We are seeing around the world a more tendency within countries to use their fiscal deficits when monetary policy is quite a constraint from the level of the interest rates. We have seen that in the US to some extent and I expect we will be seeing more of it elsewhere in the world,” she further mentioned.

(Inputs from PTI)
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