The recent surge in global borrowing has prompted economists to reevaluate the efficacy of fiscal deficit management. India’s fiscal deficit, for instance, has been a subject of concern, with the government aiming to reduce it to 3.8% of GDP by 2025. To achieve this, the government has implemented various measures, including a reduction in subsidies and an increase in taxes. However, critics argue that these measures may have a negative impact on the economy, particularly on the poorer sections of society.
A balanced approach is necessary to ensure that the government’s fiscal policies do not exacerbate income inequality. With a projected GDP growth rate of 7.5% in 2023, the government must tread carefully to avoid derailing the economy. By adopting a prudent fiscal policy, India can navigate the challenges of a rapidly changing global economy.