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Govt. may cut spending to curb deficit
Why is it in the news?
- According to government sources, government is likely to cut spending for the current fiscal by as much as Rs. 2 trillion as it faces one of the biggest tax shortfalls in recent years.
More in the news
- Negative Impact:
(1) Indian Economy is growing at its slowest pace in over six years because of lack of private investment.
(2) The cuts in spending could hurt the economy further if the government cuts spending.
- Revenue Shortfall:
(1) With a revenue shortfall of about ₹2.5 trillion, the government has little choice to keep its deficit within ”acceptable limits”.
(2) The Centre has spent about 65% of the total expenditure target of Rs. 27.86 trillion till November but reduced the pace of spending in October and November.
- Targeting Deficit:
(1) Government is likely to keep fiscal deficit under 3.8% of GDP.
(2) It is likely to announce additional borrowing of Rs. 300-500 billion for the current year to match the revised fiscal deficit.
Source
The Hindu.