India should not worry about fiscal deficit and continue spending as required to save lives and jobs amidst the COVID-19 pandemic, NITI Aayog Vice Chairman Rajiv Kumar has said. "If you have to spend money because you have to save both lives and livelihoods then that's what you have to do...issues about fiscal space could be on the backburner" Kumar said in an interview to Bloomberg. India's fiscal deficit soared to 9.3 per cent of GDP in financial year 2020-21 due to higher spending by the government to combat coronavirus and provide economic relief. The government has set a fiscal deficit target of 6.8 per cent of GDP for FY22. The deadly second wave of COVID-19 during April-May this year had hit the economy hard, with the country reporting over 4 lakh daily cases at its peak. Kumar said going by what other countries have experienced, there is a high probability of a third wave in India.
Also Read: Azim Premji philanthropic arms received Rs 18,000 cr in last five years He also rejected worries about inflation due to higher spending by the government, saying inflation has remained within the Reserve Bank of India's targeted range of 2-6 per cent for most part of the year. "The direct relation that people have talked about between fiscal expansion and inflation doesn't really hold," Kumar said, calling the recent increase in prices temporary. India's retail inflation eased to 6.26 per cent in June as compared to 6.30 per cent in May, as per the data released on Monday. Kumar also said that the government is focused on disinvestment and would meet its target of Rs 1.75 lakh crore for FY22, as per the news agency.
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