ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Misplaced Focus on Fiscal Deficit

One of the disconcerting aspects of fiscal management since the beginning of the stabilisation programme in 1991-92 has been the failure to focus on correcting the growing revenue deficit of the central government. The focus instead has been on reducing gross fiscal deficit without taking into account the structure of financing of this deficit.

Correcting Interest Rate Distortions

While the monetary authorities have sought to correct the distortions in the yield rates on government debt, they have not addressed the question of high interest rates on commercial sector bonds for which the FIs and PSUs have been mainly responsible. The situation calls for policy initiatives by the RBI.

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