The recent surge in government borrowing has sparked intense debates about fiscal responsibility. In India, the union budget has consistently shown a fiscal deficit of over 3.5% of GDP. To combat this, policymakers have introduced measures such as the Fiscal Responsibility and Budget Management Act. However, the effectiveness of such measures is still being questioned.
With a fiscal deficit of 6.8% of GDP in 2020, it is clear that more needs to be done to reduce borrowing and promote fiscal sustainability. Experts argue that a combination of taxation reforms and subsidies reduction could help achieve this goal. As the global economy continues to evolve, it is essential for governments to adopt fresh fiscal frameworks that prioritize sustainability and responsible borrowing.
For instance, the European Union’s fiscal compact has shown promising results in reducing debt and promoting economic growth. By adopting similar measures, governments can ensure a more stable financial future.