There is no sign of slowing down of financial crisis in India''s economy, with government spending likely to continue. Finance Minister Pranab Mukherjee''s interim budget has confirmed the worst fears of economists that India''s fiscal deficit is expanding.
According to financial firm, Goldman Sachs, India''s combined fiscal deficit at around 11 per cent of GDP is now among the highest in the world. The deficit is unlikely to come down in the next few years. Also, global rating agencies like Moody''s, Fitch and S&P have warned that India''s rating may be downgraded.
In the meantime, policymakers insist the rising deficit is expected, given the government''s increased spending. Montek Singh Ahluwalia, Deputy Chairperson of Planning Commission, said, "I should say it''s a cause of congratulations. All of you who have been asking for a fiscal stimulus should congratulate the government that you have been given a fiscal stimulus. It''s impossible to have a fiscal stimulus and not increase in deficit."
According to financial firm, Goldman Sachs, India''s combined fiscal deficit at around 11 per cent of GDP is now among the highest in the world. The deficit is unlikely to come down in the next few years. Also, global rating agencies like Moody''s, Fitch and S&P have warned that India''s rating may be downgraded.
In the meantime, policymakers insist the rising deficit is expected, given the government''s increased spending. Montek Singh Ahluwalia, Deputy Chairperson of Planning Commission, said, "I should say it''s a cause of congratulations. All of you who have been asking for a fiscal stimulus should congratulate the government that you have been given a fiscal stimulus. It''s impossible to have a fiscal stimulus and not increase in deficit."
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