'Global markets see uncertainty but India still a bright spot'

India's projected 7.6% growth this year can be considered very good, says economic affairs secretary in pre-Budget video

Economic Affairs Secretary Shaktikanta Das on Monday said the global economy was witnessing a kind of unpredictability and volatility never seen before but India continued to be a rare bright spot.

“There was a time when we used to say that we do not know what will happen in Europe or the rest of the world next week.

"But today we are in a position where we do not know what will happen the next day,” Das said in a video uploaded on the finance ministry’s YouTube channel.

“Unexpectedly, the world markets are crashing.

"Suddenly you find that some currency or the other is depreciating.

"Whatever happens in any part of the world affects us.

"But amid all these problems and this turbulence, India remains afloat.

"Not only afloat -- as the central statistics office says -- we are expecting a growth of 7.6 per cent this year, which can be considered very good, given the circumstances.”

The economic affairs secretary’s video was the latest pre-Budget statement after those by Minister of State for Finance Jayant Sinha, Finance Secretary Ratan Watal and Revenue Secretary Hasmukh Adhia.

The series of videos is something North Block is trying for the first time, with senior officials explaining the Budget process and what it may mean for various stakeholders, without going into the details.

In Monday’s video, Das spoke on the ongoing debate regarding the fiscal deficit target for 2016-17.

“Expenditure is important because the government has to implement schemes.

"It has to see that the development and growth rises because of government initiatives.

"At the same time, what is also important is my borrowing capacity.

"The balance has to be found between what are your spending requirements, what are the critical components on which you need to spend and, on the other hand, how much can you borrow so that I am able to repay," he said.

“There are two schools of thoughts.

"Some people say you should not worry about borrowing, spending is something on which you should focus on. Another school of thought says that the fiscal deficit should be tight otherwise the repayment capacity gets affected.

"The truth lies somewhere in the middle and usually the government does a fine balancing act.”

While the current fiscal responsibility and budget management norms state that the fiscal deficit for 2016-17 should be 3.5 per cent of gross domestic product, Finance Minister Arun Jaitley was also looking at a huge spending burden due to the recommendations of the Seventh Pay Commission; One Rank, One Pension outgo; rural sector schemes and infrastructure spending.

"Growth is important because growth leads to job creation, growth leads to more opportunities, more economic activities which lead to more development," he said.

Image: Labourers unload sacks filled with onions at a wholesale vegetable market in Chennai. Photograph: Babu/Reuters

Read our complete Budget coverage