There is doubt in the mind of budget watchers that, the
effects of strict adherence to the 4.1% of target regarding fiscal deficit in
this year’s budget will cause damage to the growth process JM Keynes has
suggested expansion in government expenditure during sluggish economic situation . The fear is , if
strict adherence to the deficit target is still attempted , it may probably be at the expense of the social sector
expenditure The economists feel that, any attempt to cut down expenditure on
social infrastructure such as education, health and training will have serious implications on human
capital formation in a nation with large number of un skilled and labourers, Therefore
such an attempt is likely to affect physical capital formation too. Similarly
any reduced priority treatment to
agriculture and small sector in the budget
allocation will hamper growth process
severely . Hence the 4. 1% fiscal
deficit target can wait till the Indian economy gears up and gets into the path
of recovery .
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