The government should undertake targeted expenditure to stimulate the pandemic-battered economy and not go in for a general expansion expecting "magical results", says Arvind Virmani, former chief economic adviser to the finance ministry.

"I have argued that as far as government's own expenditures are concerned, it must be very targeted because it is no use to think that we will just expand government expenditure and you will get magical results," says Virmani in an interview to Cogencis.

"You will get excess supply and demand situations in different things which will not solve the problem, which will not get you more demand and output," he said.

If the government undertakes targeted expenditure to enable the economy to shrug off the fallout of the pandemic, then the fiscal deficit does not matter much, said Virmani, who currently chairs the Foundation for Economic Growth and Welfare.

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