India does not rule out fiscal consolidation pause this year

By Abhijit Roy Chowdhury and Vrishti Beniwal

India cannot rule out a pause in its fiscal consolidation plan in the year through March, a key government adviser said.

"Setting overly ambitious targets for consolidation -- especially in a pre-election year -- based on optimistic forecasts that carry a high risk of not being realized will not garner credibility," Chief Economic Adviser Arvind Subramanian said in the Economic Survey presented in Parliament on Monday.


Sovereign bonds extended decline, with the yield on benchmark 10-year notes rising by three basis points to 7.33 percent as of 12:12 p.m. in Mumbai. The rupee traded little changed.

The recommendations set the tone for India’s budget presentation on Thursday, where Prime Minister Narendra Modi is expected to strike a balance between giving incentives to taxpayers before 2019 national polls and reassuring rating companies looking for an improvement in one of Asia’s widest budget deficits.

India’s economy is expected to grow at 6.75 percent this year on the back of a recovery in second half of the year, the annual report said. It sees India’s gross domestic product expanding to about 7-7.5 percent next financial year and warned economic management will be challenging in the coming year due to the overall economic and political background.