IS EXCESSIVE EMPHASIS ON FISCAL PRUDENCE HINDERING GROWTH PROSPECTS?

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Is excessive emphasis on fiscal prudence hindering growth prospects?

 The Finance Ministry has made significant efforts to maintain a disciplined fiscal deficit post-COVID, resulting in a stronger economy.

 However, as we enter the new normal, it may be necessary to loosen fiscal policies in order to increase disposable income for the middle-income group and stimulate economic growth. It appears that the government is prioritizing political interests over fiscal reform, potentially impeding growth. Instead, a shift towards liberal policies, such as reducing taxes and providing direction for India's youth population, could be more beneficial. Other countries with more liberal tax regimes are attracting talented individuals away from India.

 In order to boost employment opportunities, India needs double-digit GDP growth. Without a change in the government's preference for looser fiscal policies over tighter fiscal prudence, there is concern that future GDP growth may not even reach 6-7%. The Finance Ministry should consider implementing better tax reforms and increasing spending on infrastructure, education, and healthcare to attract global opportunities to India. 

May the new year bring better times ahead!

                                              HAPPY NEW YEAR

-Rajendra Jhanwar


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