The Indian government has been striving to reduce its fiscal deficit in recent years. One key strategy employed has been prudent borrowing. By borrowing at lower interest rates and for shorter durations, the government aims to minimize its debt burden. According to data, the government’s fiscal deficit has decreased from 4.5% of GDP in 2019 to 3.8% in 2022.
This reduction can be attributed to the government’s prudent borrowing strategies, including the issuance of short-term bonds and the utilization of foreign exchange reserves. However, experts warn that the government must remain vigilant and continue to implement fiscal discipline to achieve its goal of reducing the fiscal deficit to 3% of GDP by 2025. With a focus on prudent borrowing and fiscal prudence, India can achieve sustainable economic growth and reduce its debt burden.