NEW DELHI (Reuters) – India’s slowing economy will need a boost soon after the current election but budget stresses mean New Delhi probably has to rely on the Reserve Bank of India to provide it through more interest rate cuts, according to two senior finance ministry officials.
The government lacks the ability to hike already-planned spending to spur growth, they said, as revenue in the year ending March 2020 is likely to be below target while borrowing will rise, mainly for a new farm support scheme.
“Right now the government is not thinking of any stimulus. I do not think we can afford it, as any package would ultimately lead to higher borrowing,” one of the ministry officials, who insisted on anonymity, told Reuters.
The government has a fiscal deficit target of 3.4% of gross domestic product for 2019/20.
The finance ministry did not respond to a request for comment.