Managing the fiscal deficit

02 DEC,2019 | MEDC


 

 

India’s fiscal deficit for the first seven months of this financial year has already breached its estimate for the whole year. Most experts expect the government to miss the 3.3% fiscal deficit target for this year. We are clearly, living beyond our means and in an unsustainable manner. The main supply side measures (tax cuts) initiated by the government are necessary, but not sufficient, to boost demand. For growth to be sustainable, fixed capital formation as a share of GDP has to rise. Constraints facing stalled projects need to be systematically resolved. GST functioning should be smoothened, and its implementation process made more acceptable to larger sections of trade and industry. An innovative policy approach is necessary to optimize India’s inherent economic resilience.

*Photo Credit: Google

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