Budget and Long Term Fiscal Policy

In this paper, the author examines the various components of the central government budget against the projections made in the Long Term Fiscal Policy (LTFP) paper The components which account for the huge deficit are discussed. Will it be possible to contain the deficit at the level indicated in the budget? Will it be inflationary? The paper concludes that there is a serious problem of resource mobilisation. Increased outlays on defence may be justified on grounds of national security. But periods of national insecurity are also periods of tightening of belts and increased efforts at resource mobilisation. This is altogether missing in the budget. While the expenditure projections of the LTFP have received a severe knock, our resource mobilisation efforts still continue to be constrained by the LTFP.