India’s fiscal deficit has been a concern for policymakers. To address this, the government can adopt strategic borrowing methods. By issuing long-term bonds, the government can reduce its reliance on short-term debt. This approach has been successful in countries like Japan and the UK.
For instance, Japan’s fiscal deficit decreased by 2% in 2020 after implementing a long-term bond issuance program. Similarly, the UK’s debt-to-GDP ratio decreased by 1.5% in 2022. India can learn from these examples and implement similar strategies to narrow its fiscal deficit. With a focused approach, India can reduce its fiscal deficit and achieve economic stability.
The government must carefully plan its borrowing to achieve this goal.