The Indian government has been striving to reduce its fiscal deficit in recent years. One strategy employed is strategic borrowing. By borrowing at lower interest rates, the government can reduce its debt burden.
For instance, in 2022, the government borrowed ₹12.5 trillion at an average interest rate of 7.7%. This was lower than the previous year’s average rate of 8.1%. The government aims to reduce its fiscal deficit to 6.4% of GDP by 2025. To achieve this, it plans to increase tax revenues and reduce unnecessary expenditures.
The implementation of GST reforms has also contributed to increased tax revenues. The government’s efforts to reduce the fiscal deficit are commendable, and with sustained efforts, it is possible to achieve the target. The reduction in fiscal deficit will lead to increased investor confidence and economic growth.