Stressed assets key area of concern, warns CEA

Tribune News Service/ PTI

New Delhi, September 23

The term of Chief Economic Adviser Arvind Subramanian will be extended by a year till October 2018, Finance Minister Arun Jaitley said today. A senior fellow at the Peterson Institute for International Economics, Subramanian was appointed CEA in 2014. His  term was to end on October 16.

Subramanian said the economy was facing multiple headwinds. “We have lots of challenges ahead... we have seen growth slowing down and investment not picking up. So, we have to attack this problem on many fronts while maintaining macro-economic stability,” he said. He identified stressed assets as a key area of concern.

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On appreciation of the rupee, Subramanian said all emerging economies face this problem, with a surge in capital inflow putting pressure on the exchange rate.

“All countries struggle with this challenge. Different countries take measures based on their trade-offs and objectives,” he pointed out.

The big appreciation in the rupee between January and April had impacted both exports and imports, he said, adding that the RBI had been intervening in the forex market for the past three months. He was hopeful of moderation of forex in coming days.

On the stimulus package, the CEA said, it was being worked out and an announcement would be made at an appropriate time.

Speculation is rife that the government plans to provide a huge stimulus to various sectors, including power and railways, to revive growth, which hit a three-year low of 5.7 per cent in the April-June quarter.

Two years ago, India was touted as a rare bright spot in a gloomy global economy, with the GDP growth outpacing a slowing China. 

Sources said the government was keen to address structural problems facing the economy as well as transient issues with the implementation of the Goods and Services Tax (GST), which is touted to boost growth by up to 2 percentage points.

Technical glitches in the first two months of the GST rollout have created a scare that revenues may fall way short of expectations.