India’s fiscal deficit has been a subject of concern for policymakers. With a deficit of 6.4% of GDP in 2022, the government needs to adopt strategic debt management. This can be achieved by increasing tax revenues and reducing non-essential expenditures. For instance, the government can focus on improving tax compliance and introducing measures to curb tax evasion.
By doing so, India can reduce its fiscal deficit to 5.5% of GDP by 2025, as estimated by the IMF. Effective debt management will not only ensure fiscal prudence but also promote economic growth and stability.