Last week’s Union budget for 2021-22 targets a fiscal deficit of 6.8%. It might sound counterintuitive, but this target is too conservative. With GDP growth projected to be 14.4% as the economy rebounds from the Covid-19 economic shock, India has a rare opportunity to run a larger fiscal deficit without pushing the debt-to-GDP ratio higher. … Read more
The government is confident of lowering the fiscal deficit to 4.5 per cent of GDP by 2025-26 fiscal, considering a nominal GDP growth of 10 per cent every year, Expenditure Secretary T V Somanathan has said. India has exceeded its fiscal deficit target of 3.5 per cent in the current fiscal by a wide margin … Read more
Wider fiscal deficits and a more gradual pace of consolidation will lift the Indian government’s debt and pressure its sovereign ratings, Fitch Ratings said, cautioning that the fiscal firepower is limited due to a high debt ratio. Finance Minister Nirmala Sitharaman said the current year fiscal deficit will touch 9.5% of GDP, much higher than … Read more
A crisis can make life simple, reducing it to the absolute necessities. Since the coronavirus hit us last year, most activities and complexities of life melted away, postponed to some far away future. The formula became simple – stay safe while keeping work/business going as best as possible. Ms Sitharaman had an equally simple task … Read more
India has for long grappled with the issue of reducing its fiscal deficit or the difference between the government’s total receipts and expenditures for a given financial year. While what makes for an “optimal” fiscal deficit remains a debated matter between fiscal hawks and doves, the figure has been on the downtrend for the last … Read more
Economists like Raghuram Rajan, Abhijit V Banerjee and Manmohan Singh, as well as politicians like P Chidambaram and Yogendra Yadav, have been advocating more cash be put in the hands of people. But they haven’t answered ‘How?’, ‘How much?’, and ‘At what cost?’ Synopsis Economists like Raghuram Rajan, Abhijit V Banerjee and Manmohan Singh, as … Read more
India has proved more resilient than one dared hope. Synopsis Other countries have been hit by a second Covid surge and accompanying curbs on economic activity. But not India. All short-term indicators from October onward — electricity consumption, rail freight, auto sales, goods and services tax (GST) receipts — keep rising. If this trend continues … Read more
The pandemic-induced growth contraction and additional spending to support the needy amounting to a little over 2 per cent of the economy are likely to push the combined fiscal deficit to 13 per cent of GDP this fiscal – nearly double of the past year, according to a report. Similarly, these numbers will see the … Read more
“The government has no business to be in business” – this intention has been articulated repeatedly not just by the Prime Minister himself, but also by the government as part of the Economic Survey 2019-20 where an entire chapter discussed privatization as a tool to create value for all stakeholders. Examining the realized efficiency gains … Read more
New Delhi: Former RBI Governor D Subbarao on Friday said India is not close to the situation where the central bank has to go for debt monetisation amid rising government spending and falling revenue collection due to the COVID-19 crisis. The case for direct financing is made on the argument that government borrowing this year … Read more