Fiscal Consolidation refers to the steps taken by any Govt. to check the rising Fiscal Deficit. Fiscal consolidation is a process where government’s fiscal health is getting improved and is indicated by reduced fiscal deficit. Improved tax revenue realization and better aligned expenditure are the components of fiscal consolidation as the fiscal deficit reaches at a manageable level.
According to Financial time’s lexicon, “Fiscal consolidation is a reduction in the underlying fiscal deficit. It is not aimed at eliminating fiscal debt.”
In India, fiscal deficit is the king indicator to show the fiscal health of the government. Effectively, fiscal deficit indicate the amount of government borrowing for that particular year. Excess fiscal deficit produces some adverse effects. For the government it causes interest payment burden and for the economy it produces inflationary effect, and rising interest rate in the economy,
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