The reason behind India’s high growth rate is the quality of public expenditure, which has improved significantly in the current financial year, the government has said.
“In the current fiscal, our capital expenditure, which goes into asset creation, has seen a significant growth as against revenue expenditure, which goes into salary payment and rent … and is resulting in high growth,” Finance Secretary Ratan P. Watal said in an interview on the ministry’s YouTube channel, ahead of the Union Budget at the end of the month.
“This has happened after a gap of many years. This may also be a reason why we are recording a high growth,” he said.
“Quality of expenditure has also improved this fiscal,” he added.
Noting that revenues being received are in tandem with expenditure the government is incurring, Watal said this meant that things were moving as planned.
According to official data Plan expenditure during from April to December was 74.4 percent of the Budget estimates, as compared to 61.3 percent during the same period a year ago.
The improvement was more significant with regard to plan expenses on capital account. It was 85.3 per cent of Budget Estimates at the end of December as again 57.9 per cent a year ago.
The government has targeted reducing the fiscal deficit to 3.9 percent of the gross domestic product (GDP) in the current financial year, from four percent last year, and reduce it further to 3.5 percent in 2016-17.
“Expenditure management has been on track in the current fiscal. The world is going through turbulent time. The growth rates are low globally. Among BRICS countries only India is standing out because our macro-economic indicators are strong,” Watal said.
“We are trying to further strengthen it.”
The Indian economy grew 7.3 percent in the third quarter ended December 31, 2015, down from the 7.7 percent expansion in the previous quarter, but marginally up over 7.1 percent recorded in the like period of last fiscal, the official data showed last week.
The government’s mid-year economic review, released last December, lowered the economic growth forecast for the current fiscal to the 7-7.5 percent range, from the previously projected 8.1-8.5 percent, mainly because of lower agricultural output due to deficient rainfall.