Reaching fiscal deficit targets

19 FEB,2020 | MEDC


 

In almost every budget, deviations from fiscal deficit targets have become the norm. This is disconcerting as our fiscal deficit targets are now gradually losing their credibility. A way out is to accept the reality of our situation and simply shift the official target to above 3% (its current value). The danger here is that data manipulation may not stop, but simply begin at another level. If this is, in any case, going to happen, it is better that the official target is set relatively stringently. Expenditure cannot be curbed in a growing economy, and so the only way to contain the deficit is to enhance the GDP. This calls for a thrust on greatly improved export performance, along with the lowering of protectionist tendencies. The challenge facing the government is to create a roadmap to shrink the deficit to a sustainable level, which would open up more space for private sector participation in the economy.

*Photo Credit: Google

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