New Ficci President Sangita Reddy on Tuesday urged the government not to worry too much about the fiscal deficit and try to pump the economy by increasing investments to arrest slowdown and accelerate growth.
"We need to infuse capital into the economy. The fact is that there is a slowdown of the GDP but to pump prime economy, adequate capital is really the need of the hour and therefore the preposition which we put forward is that we should not worry for a small expansion in fiscal deficit," she said.
She said that the government should find a mechanism to infuse Rs 1.5 to Rs 2 lakh crore into the economy as it would help spurring consumption. With the slowdown in economic growth, the government will face difficulty in adhering to the fiscal deficit road map laid down in the FRBM Act.
"With the increased consumption or purchasing power of people, investments and the overall sentiment of the corporate India will improve and this will create a virtuous cycle, which grows the GDP," she told PTI. When asked whether the government has enough fiscal space to infuse money into the system, Reddy said the government has the space because the fiscal deficit is still under control.
"One mechanism to do this would be to raise money from the RBI," she said, adding the government should also simultaneously pursue disinvestment programme in a time-bound manner. The government aims to restrict the fiscal deficit to 3.3 per cent of the GDP for the financial year ending March 2020.
If there will be well articulated and executed plan, then the expansion in fiscal deficit will not affect India’s ratings, she added. Further the new president said that there is a need to focus on boosting exports.
"We are only 1.7 per cent of global trade and this is miniscule for country like India and we should ramp this up," she said. Exports during April-November 2019-20 has dipped by about 2 per cent to USD 212 billion.
On ease of doing business, she said there is more work needs to done by reducing amount of regulation, and further simplification. "We have improved but definitely there is a more scope," she said.