Long road to fiscal consolidation

Even though India needs large infrastructure investments, the government should have prioritised fiscal consolidation

Rajesh Kumar

Union Budget-related commentaries are usually focused on the potential economic and financial market impact during the year. Since the economy has just recovered from an unprecedented shock, which dealt a mighty blow to public finances, it is important to assess medium-term possibilities for government finances and their implications as well. This is also essential because the government did not present medium-term fiscal projections, owing to continued global uncertainty. The government, however, has given itself a target of reducing the fiscal deficit to under 4.5 per cent of gross domestic product (GDP) by 2025-26.
As things stand, the government clearly has a challenging fiscal path ahead and will need to make sustained efforts over many years to attain Fiscal Responsibility and Budget Management (FRBM) Act targets. Let us first consider the target of 4.5 per cent of GDP. The target for 2023-24 is to reduce the fiscal deficit to 5.9 per cent of GDP from the c
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of or the Business Standard newspaper

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First Published: Feb 22 2023 | 10:47 PM IST

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