Mehta believes that lower imported oil price is a key positive. She expects further reduction in customs duty in the Budget. She also adds that thrust in infrastructure is needed to maintain high growth rate.
Excerpts of CNBC-TV18's exclusive interview with Sucheta Mehta:
What are the key takeaways from the statements in the Economic Survey that the external sector will be actually kinder to the Indian economy in 2007 - are you expecting more pro-trade liberalization policies from the government?
I think that on the current account balance front, the key positive at this point in time is that the price of imported oil is lower YoY. This helps moderate impact of imported inflation on firstly, the Economy and secondly the impact of oil on the current account balance.
So that is one thing that is positive from the global environment perspective. I think that trade liberalisation has been an ongoing theme. Perhaps, further reduction in customs duty could be one thing that could be coming through in the Budget.
Are you expecting that the government will perhaps let go on fiscal deficits to some extent, considering that the government is way ahead of target, and therefore use that kind of money for infrastructure and for financial inclusion?
Infrastructure development definitely needs a lot of government support. It does need to be the top priority for the government at this point in time, given that growth so far has been strong and would need support from infrastructure going forward to make it more sustainable.
I think on that basis, yes, the government would need to increase expenditure there but the leeway that the government has at this point in time is that the growth is strong and it is expected to remain around 8 per cent next year, which would mean that the tax collections are good. So the key question from hereon would be 'how do you manage your expenses, how do you make it more growth friendly or more growth attainable?'
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