Public expenditure alone will not revive economy: ICRIER Chief | business | Hindustan Times
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Public expenditure alone will not revive economy: ICRIER Chief

business Updated: Jul 12, 2009 12:52 IST
PTI
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The government is over estimating growth and public expenditure alone would not revive the economy.

So thinks Rajiv Kumar, director, Indian Council for Research on International Economic Relations.

And, the country could fall into a debt trap.

"The government is estimating 6.5 to 7 per cent growth this fiscal. My estimate is 6 per cent. I think the government is over-estimating manufacturing and also agriculture given the monsoon situation," Kumar told PTI in New Delhi.

Further, he expects the fiscal deficit to be worse than the government's projection of 6.8 per cent of the GDP because of the lower GDP growth rate.

Though Kumar says he is not trying to be alarmist, he warned that the growing public debt - "scary numbers" - might lead to a debt trap and that the market and rating agencies would punish the country.

"Public debt to GDP ratio might rise well above 83 per cent. It is already 79 per cent. With this and debt servicing to total revenue receipts at 55 per cent, you are continuously borrowing to repay and that can spell trouble," he said.

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