Stretch fiscal deficit to fuel growth: KV Kamath

Veteran banker K V Kamath on Friday said it is 'time to be brave' for the government, and it should stretch the fiscal deficit target set in the budget if need be, to push growth. He said benign interest rates of under 8 per cent and abundant liquidity are also necessary to seize what he called as a 25-year growth runway opportunity awaiting the country.

The government has targeted to get the fiscal deficit at 6.8 per cent for FY22 in the Budget presented early this year. However, ravages of the second wave of the Covid-19 pandemic have resulted in calls for more spending by the government even as the revenue collections go down.

"This is a time to be brave. That is the only way out of the challenge that we have. To the extent that you need to stretch the budget, you do it," Kamath said, speaking at an event organised by the IMC Chamber of Commerce and Industry.

He said the government has already been brave while presenting the Budget and has said that they are willing to stretch the deficit to make sure that the country continues to be on a growth path. Kamath, who had a long stint with ICICI Bank, said he does not feel that the fiscal slippage will be very wide because of the wide variety of innovative financing options that are available to raise money for projects and also monetisation.