Asian Journal of Research in Business Economics and Management
Year : 2013, Volume : 3, Issue : 8
First page : ( 22) Last page : ( 31)
Online ISSN : 2249-7307.

Fiscal deficit and economic growth: Fiscal consolidation and the way forward

Ms. Roy Eritriya

Assistant Lecturer, Hidayatullah National Law University, Raipur, India

Online published on 9 August, 2013.

Abstract

The Global financial that erupted around September 2008 saw India fiscal policy being tested. And so it became important to reintroduce the process of fiscal consolidation without obstructing and slowing down the growth process. The need for fiscal consolidation and sustainability for the development of Indian economy in today's times is one of the key demands of economists. As a result of anchoring role played by FRBM Act adhering to decrease in fiscal deficit, the fiscal deficit for 2010–11 eventually declined to a better target of 5–1 percent of GDP with registering a GDP of 8.5 percent. The paper examines the fiscal condition of Indian economy. The paper uses secondary data and provides a survey of literature work for linkage between fiscal deficit and economic growth. It also presents an analysis of relation of fiscal deficit and economic growth. The paper would conclude by providing suggestions to get the Indian economy back on the path of sustained rapid economic growth.

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Keywords

Fiscal deficit, Fiscal consolidation, economic growth.

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