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

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THE BUDGET-Blinkered View

has received more attention in recent months than the size of the budgetary deficit. And .foremost among those expressing concern on this score has been the head of the country's central banking authority himself. Most recently, reacting to the views expressed by one of the vice-presidents of the World Bank, Stanley Fischer, in a lecture in Bombay, the governor of the Reserve Bank urged that the definition of the budget deficit be widened to include the government's market borrowings as well A Part from the current practise understating the size of the deficit, governor Malhotra's other reason for advocating a change in it was that "it made everyone forget the cost of borrowing which inevitably led to higher interest payments in the future, thereby contributing to higher expenditure and growing budget deficit". Earlier, in his address at the annual conference of the Indian Economic Association at Trivandrum in December last, the Reserve Bank governor had made a strong plea for bringing down the fiscal deficit as a proportion of GDP and even argued that "over the medium-term... beyond a mutually agreed ways and means accommodation from the Reserve Bank, government should aim at placing its entire debt in the market at appropriate interest rates".

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