Art of balancing Fiscal and Monetary intervention crucial for sustainable GDP growth – Dr Niranjan Hiranandani

New Delhi, June 02, 2022: The fiscal deficit of the Government of India (GoI) was contained marginally below the revised estimate. GDP for Q4 FY22 was as per expectations (4.1 per cent), while GDP for FY 22 was ‘fair’ (8.7 per cent) while Fiscal Deficit at 6.7 per cent as compared to the estimated 6.9 per cent was obviously a good sign. With 8 Core sectors registering (8.4 per cent) a good economic performance indicator and construction growth (11.5 per cent) and realty growth (4.2 per cent) reflecting sustainable housing demand and impetus to infrastructure projects, the ‘Engine of Recovery’ has been private consumption (7.9 per cent). Private consumption and Investments both, reflect higher growth, in line with expectations

Mentioning CAPEX growth (5.2 per cent) and tax revenue (Rs 27Kcr VS Rs 25Kcr) as being much higher than expectations and projection.The fiscal intervention was the better alternative as compared to monetary tightening, which could be detrimental to GDP growth. Any hike in interest rates will negatively impact the growth pattern, and this needs to be prevented, to sustain and spur economic growth. Consumption growth needs to be incentivized.

Persistent high inflation has cast its shadow on business, investment, and consumer sentiment, and Dr Hiranandani said that “in line with the effect of global unrest, it was crucial for emerging economies like India to ensure a steady GDP growth curve, with fiscal stimulus and no more monetary tightening. This would ensure sustainable liquidity supply promoting growth velocity. The Indian economy needs an inclusive, sustainable, and balanced growth framework