India’s growth target for 2021 is ‘realistic’ – finance minister

Asia’s third-largest economy, India, is projected to grow in the range of six percent to 6.5 percent in the new fiscal year that begins on April 1.

According to the country’s Finance Minister Nirmala Sitharaman, the government’s growth targets for the next year are within reach.

“I say it is realistic because we’ve taken various factors on board, and expect the [government’s] revenue generation to improve, which it’s already showing signs of,” Sitharaman told CNBC.

She has explained that an improvement in the government’s revenue generation would enable it to invest more into infrastructure projects that could see some immediate gains as it “puts money in the hands of the people [and] core industries revive because of the demand.”

The minister also said revenue generation will likely improve due to the closing of loopholes in the indirect goods and services tax scheme. Disinvestment plans for struggling state-owned assets are also expected to go through, she said. 

On Saturday, India announced its annual budget for the new fiscal year, when Sitharaman committed 2.83 trillion rupees (almost $40 billion) for agriculture and rural development. She has also lowered personal income tax brackets. Some economists claimed the budget “failed to live up to expectations.”

According to government data, India’s industrial output, one of the measures of economic activity in the country, rose 1.8 percent compared to a year ago in November.

For the fiscal year starting April 1, the fiscal deficit target has been set at 3.5 percent. The finance minister said she is not expecting any deviation from planned expenditures and revenues.

Meanwhile, ratings agency Moody’s said the 3.5 percent fiscal deficit target will be difficult to achieve. It added that the new budget highlights “challenges to fiscal consolidation from slower real and nominal growth.”

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