A Columbia University professor, tipped to be an economic adviser to India's new prime minister, says the country needs to lift capital spending to revive the economy even if that means a higher fiscal deficit.
"I am a fiscally conservative economist. At the same time we've got to worry about the revival of economic growth and that requires some increased spending on infrastructure," Arvind Panagariya, a professor of economics at Columbia, told CNBC on Wednesday.Panagariya said that increased capital expenditure would result in a higher fiscal deficit, but not by a significant degree. "Last year's fiscal deficit was 4.6 percent of GDP and it could be 4.5 percent this year which is relative to the estimate in the current budget of 4.1 percent, so it is not a large rise," he said.
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