December 8, 2023

HPAS Mains 2021/22 Answer Writing Challenge Day 20: 27-10-2021

HPAS Mains General Studies Paper 3: Economic Planning in India. Five Year Plans: strategies and outcomes, Public / Private / Joint Sectors. Fiscal Policy, Fiscal Responsibility and Budget Management Act, 2003, Debt and Investment in India: Current Status, Growth and Development experience including Natural Resource Management.

Question  : Discuss the status of the fiscal deficit in India and suggest some measures to keep it under check? (20 marks, 400 words)

Understanding of Question:
DirectiveDiscuss: This is an all-encompassing directive – you must debate on paper by going through the details of the issues concerned by examining each one of them.
IntroductionProvide definition of fiscal deficit
Main BodyStatus of fiscal deficit in India:

∙           India’s fiscal deficit stood at 18 lakh crore at the end of first quarter in 2021, which is 9.3 % of the GDP.

∙           The Union budget has estimated the fiscal deficit for 2020-21 to be 3.3% of the Gross domestic product (GDP)

Reasons for increasing fiscal deficit:

∙           Lower Revenue Realisation

∙           Higher Expenditure

∙           Slowdown in economy

Measures to keep ‘Fiscal Deficit’ under check are:

∙           aggressive disinvestment

∙           cleaning up of balance sheets of regular commercial banks.

∙           tweaking the definition of expenditures

∙           deferment of some non-essential expenditure

ConclusionImproved tax revenue realization and better aligned expenditure are key to fiscal consolidation
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