Maintaining a healthy fiscal deficit will be paramount for the Indian economy, SEBI whole-time member G Mahalingam said exclusively to Newsd on Tuesday. Fiscal deficit is the gap between a country’s total revenue and total expenditure. While speaking to Group Editor of Newsd, Shutapa Paul, Mahalingam professed concern over rising oil prices.
“The near term challenges is that fiscal deficit has to be in good shape as the government has done it so far. Which means we should not allow the fisc (fiscal deficit) to go out of shape. We are targetting 3.2 percent of the GDP, which will be very good if we can achieve it,” Mahalingam said in an interview to Newsd on the sidelines of the Indian Private Equity and Venture Capital Association’s Annual India Alternatives Conclave 2017. Newsd is an Associate Partner for the event.
“The current account deficit has fairly come in a good trajectory, which is not much of a problem. But if the oil prices go up, then it is going to be a very big risk for the country. We have already seen it going up from a level of $45 to $53-55. If it goes up by another $10-15, it will create some amount of pressure on the import front,” said Mahalingam.
He said that overall the Indian economy was looking strong. While typically monsoon can also play a big role, he said that reports indicate that the El Nino phenomenon may not be too strong this time, which augured well for the economy. “But if monsoon plays truant it will have impact on agriculture and inflation. These are risks we have to keep in mind. But otherwise I still feel overall the projections for the country are strong and positive.”
While developed countries such as the US is coming out of recession, India has been trying to put its macro-economic parameters in order, said Mahalingam. “If you look at macro-economic parameters of India, whether it is growth, inflation, current account deficit or fiscal deficit, on all these fronts we have been trying to put the house in order. This is going to lay a solid foundation to retain investor interest in India. I feel India continues to be a good destination target for foreign investors,” said Mahalingam.