India’s macro stability gives govt room to tackle global headwinds: Aditya Birla Sun Life MF CEO

India’s macroeconomic stability, with inflation at an eight-year low and GDP growth far ahead of expectations, has created fiscal room for the government to tackle global headwinds, said A Bala Subramanian, Managing Director and CEO of Aditya Birla Sun Life Mutual Fund.

Speaking to BT TV, Subramanian said that while global markets, especially the US and Japan, are grappling with high bond yields and inflationary pressures, India has managed to strike the right balance.

“Bond market is always a leading indicator for many things, especially the fiscal position generally gets reflected on the bond market,” he said. Subramanian pointed out that India has been “extremely successful in eradicating the twin deficit which used to be the current account and fiscal deficit” while keeping inflation in check.

On global cues, he highlighted that the US continues to face elevated bond yields due to high fiscal spending and strong job markets, while Japan has seen yields spike after years of deflation as inflation finally returned. “Too low yield also is not highly productive from the economic growth point of view,” he said, adding that India’s proactive fiscal and monetary steps stand in sharp contrast to these economies.

Turning to the domestic front, Subramanian stressed that the government’s fiscal prudence has left India well positioned to stimulate demand if needed. “Thanks to the fiscal improvement which we have now done, we have enough room for us to spend money if need be,” he told BT TV, citing GST rate cuts as a possible tool to drive consumption ahead of the festive season.

Subramanian said the recent 7.8 per cent GDP growth was partly a result of revived public spending, which had been delayed due to last year’s multiple elections. “The finance minister has been ensuring that each of the ministries where the capital allocation is kept, they have to be utilised for the purpose for which this allocation has been kept to drive the public sector spending,” Subramanian said.

Private sector investments in areas such as electronics, semiconductor chips, and renewable energy are also beginning to add to growth momentum, he added. “Money is being invested by the private sector in building new capacity… I think India has progressed quite a lot,” he said.