India's chief statistician T C A Anant has welcomed the government's flagship scheme of Direct Cash Transfer (DCT) to the poor in subsidized products and cleared that its impact on inflation will depend on how it is financed.
Appreciating to DCT scheme, Anant said that Direct Cash Transfer mechanism is more transparent and leak proof than indirect cash transfer mechanism.
'It is a right move towards cutting leakages in the subsidy system,' he said.
Commenting upon its impact on inflation, he said that it will depend on the government's overall "budgetary position" and how the scheme is financed.
"Indirect transfers are more prone to leakages than direct cash transfers," Anant told the media on the sidelines of an event organised by the Indian Statistical Institute (ISI) here.
"So that is why the government is saying that they are planning to put in place a mechanism of direct cash transfer.
"So, from an economic perspective, it (DCT) is a step in the right direction. How well it will work will have to be seen," he said.
"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," he added.
If the subsidy burden due to DCT is financed by additional market borrowing by the government, then it will have some inflationary pressure on the economic system.
Anant was hopeful that the current capital inflow into the country would remain stable as the overall economy was 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.
--With IANS Inputs--
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