India’s fiscal deficit has been a topic of discussion for years. The government has been trying to reduce it, but it remains a challenge. According to a report, the fiscal deficit was 6.7% of the GDP in 2021-22.
The government aims to reduce it to 6.4% in the current financial year. However, this requires nuanced approaches, such as increasing tax revenues and reducing subsidies. The goods and services tax (GST) has been a significant contributor to tax revenues, but its implementation has been marred by issues.
The government needs to address these issues to increase tax revenues. Additionally, reducing subsidies is crucial, but it requires careful planning to avoid affecting the vulnerable sections of society. The government has taken steps in this direction, such as introducing the Direct Benefit Transfer (DBT) scheme, which has helped reduce subsidy leakage.
However, more needs to be done to achieve fiscal prudence.