Tackling the fiscal deficit

14 MAR,2021 | MEDC


 

As per a recent SBI analysis, India’s combined federal and states’ Budget gap in the current fiscal year will reach 12.7%. This will be due largely to increased healthcare spending and a decline in revenues due to the ongoing pandemic. Streamlining GST to ensure compliance now remains our best bet. Despite all the celebratory signalsemanating from the stock markets, we need to remember that Covid is here to stay with us for some time more. Consumer sentiment is improving, but only a narrow elite has the ability to splurge, and we need to brace ourselves to this sobering reality. In the face of declining revenues, states are more reliant on central funds for healthcare facilities. Much will depend on the success of the government’s vaccination programme, which is now covering larger sections of the population. There is no easy way out of today’seconomic situation, and our best bet lies in rationalizing the tax system (both direct and indirect) to the extent that compliance no longer poses an issue. 

*Photo Credit: Google

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