Downplaying concerns about the Indian economy faltering, he said the fall in growth rates was not afflicting only the Indian economy but even China and Brazil which have slowed down sharply.
Speaking at a FICCI meet, Dr Mayaram said the current 5.5 per cent rate seems “dismal” right now, and the degrowth in capital goods output is a matter of grave concern. Capital goods output in June witnessed the sharpest contraction in more than six years at 27.9 per cent.
Sounding a note of caution, Dr Mayaram said fiscal deficit stands at 5.76 per cent now, adding that the government is not certain it can reach the fiscal deficit target. However, the government will take steps to tackle the fiscal deficit, he added.
Inflation is high by any standards and is the major concern for the Reserve Bank of India (RBI), he added.
“We still believe food inflation is a major concern and the government should be able to bring some comfort on food inflation so that RBI can focus on monetary policy.”
The government plans to put together a PPP (public private partnership) model for agricultural storage in the next three months, and the plan will require an investment of Rs 20,000 crore, he said, adding that measures to tackle inflation are also underway.
Food prices will be tempered, he said, because the deficit in rainfall will not be as bad as expected.
Global shocks have not been impacting demand because of the strong social sector spends of the government, he said, adding that the government has reservations on social sector spend.
There is no decline in credit flow, and consumption remains strong, according to Dr Mayaram. Demand is intact and hasn’t fallen as much as expected.
NRI inflows have improved in the first quarter of the current fiscal year to $6.5 billion compared to $1.5 billion in the previous quarter, the secretary said. Companies will now be allowed to borrow from overseas to pay off loans from Indian banks, he added.