Tuesday, 19 September 2017

Economic Slowdown is Real, not just Technical: SBI Report

By Aarushi Singh

GDP figures of India have experienced a slowdown in recent quarters. This growth slid for the sixth quarter in a row has  hit a three-year low at 5.7 per cent in the June quarter. According to SBI research slowdown is real and not technical and called for more public spending to solve the slide. Research figures depict that this fall in quarter 1 are not short term or transient.

This note has come after a mention of slowdown by BJP president Amit Shah. Reports suggest that the government should consciously expand spending and fiscal deficit, without disturbing the borrowing.

The report also points out the 2008 global credit crisis and admits a forward or upward movement in spending, but was unequivocal in not paying much heed to the rating agencies. But the present economic situation requires a fiscal push without chasing the rating upgrade.

The report also suggested that the government can use a clause in the Fiscal Responsibility and Budget Management Act that provides for a 0.5 per cent slip in fiscal deficit targets. Further talking about the borrowings and government sector investment report warned an urgent check over these factors by moving to short term borrowings.

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