ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Fiscal ConsolidationSubscribe to Fiscal Consolidation

Balancing Growth with Fiscal Consolidation

This article examines the implications of the structural changes in the budget both for the current year and in the medium term.

COVID-19 and Fiscal–Monetary Policy Coordination

Against the backdrop of the COVID-19 pandemic, the economic stimulus packages announced by the national government are analysed and an attempt is made to identify the plausible fiscal and monetary policy coordination. When credit-linked economic stimulus packages are partial in its impact on growth recovery, an accommodative fiscal policy stance in the forthcoming Union Budget 2022–23 is crucial for the economy.

 

Fiscal Consolidation and FRBM in the COVID-19 Context

The fiscal consolidation projections provided by the Fifteenth Finance Commission, including its alternative paths, have been rendered out of alignment because of the COVID-19’s deleterious economic impact.The commission has also recommended that the centre’s Fiscal Responsibility and Budget Mana

Post-COVID-19 Paths to Fiscal Consolidation

In order to analyse how the excess of growth over the real interest rate can best contribute to Indian post-COVID-19 debt adjustment paths, the article draws on historical experience, past adjustment episodes and special features of emerging markets. It notes that a countercyclical primary deficit will contribute, and together with a substantial g–r gap, lower debt most efficiently, creating space for adequate fiscal response to future shocks.

 

Erroneous Understanding of Macroeconomic Challenges

The government chose not to adequately expand budgetary expenditure to stimulate aggregate demand due to an erroneous understanding of India’s macroeconomic challenges. It relies heavily on imagined fiscal gains from demonetisation and the introduction of the Goods and Services Tax regime. The Union Budget 2017–18 was a missed opportunity for the government and our economy.

Budget without Heft

Budget 2016-17 correctly recognises that the economy is facing a demand slowdown but fails to back this up with necessary expenditure to boost aggregate demand. Guided by its programme of fiscal consolidation, the government has almost frozen public investment in order to achieve the targeted deficit for 2016-17. While its proclamation to improve ordinary lives is welcome, a rearrangement of deep-rooted structures of public expenditure in India is required to achieve this.

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