T.C.A. Anant, Chief Statistician of India, on Tuesday said the Union Government's flagship direct cash transfer (DCT) scheme is “not inflationary” and “a step in the right direction” to reduce leakages in the subsidy system.
He, however, pointed out that whether the scheme would spur inflation or not would eventually depend on the Government's overall “budgetary position”. According to him, it will also depend on the government finances.
“By itself, transfers are not inflationary. It is the overall government budgetary position which determines whether the thing is inflationary or not....In fact, in a good tax system you will have direct transfer and taxes,” Anant told reporters on the sidelines of a workshop organised by Indian Statistical Institute (ISI) here.
“Indirect transfers are more prone to leakages than direct cash transfers. So, that is why the Government is saying that it is planning to put in place a mechanism of direct cash transfer,” Anant told reporters on the sidelines of a workshop organised by Indian Statistical Institute (ISI) here.
Anant added that the importance of the scheme needs to be evaluated. “So, in that sense from economic perspective, it (DCT) is a step in the right direction. How well it will work will have to be seen,” he said.
Precisely, if the subsidy burden due to DCT is financed by additional market borrowing by the government, chances will be higher for inflationary pressure.
Meanwhile, Anant said the current capital inflow into the country would remain stable as the overall economy is expected to remain “robust”.
“Capital flows are influenced by a lot of factors. Overall expectations of the Indian economy still are robust. I would expect capital flow to stay okay,” he said.