The government has continued with its focus on capex alongside consumption boosting measures which would help the economy to improve its growth momentum, said the article, adding with a fiscal deficit target of 4.4%, the budget balances consolidation and growth objectives.
On the government plan to move away from targeting fiscal deficit and focus on debt-GDP ratio as a medium-term fiscal anchor going forward, the article said it will help “preserve macroeconomic stability.”
In an article on the quality of public expenditure and its socio-economic impact, its author evaluates the trajectory and quality of public expenditure since the July 1991 reforms.
Noting that the expenditure composition has undergone significant transformations, shaped by structural reforms and external shocks, the article said the post-liberalisation phase (1991-95) saw fiscal consolidation at the cost of capital and developmental spending, while the pre-FRBM years (1996-2003) were marked by rising debt burdens and stagnant public investment.
The implementation of fiscal responsibility frameworks (2003-08) coincided with higher capital outlays, improved these ratios, and reduced interest payments, underscoring the benefits of rules-based discipline.
“Prudent expenditure composition–prioritising capital formation and developmental outlays-remains pivotal for sustaining growth and equity. The recent emphasis on infrastructure investment and fiscal discipline has bolstered resilience, and achieving long-term sustainability necessitates balancing immediate sustainability necessitates balancing immediate spending needs with strategic investments,” says the article.