New Delhi, December 8 (IANS). CII Director Chandrajit Banerjee on Sunday said prudent fiscal management by the government for macroeconomic stability is keeping India on a fast track amid the slowdown in the global economy.
Elaborating on the Confederation of Indian Industry (CII)’s suggestions for the upcoming Union Budget, he said fiscal management has maintained the right balance between fiscal deficit and fiscal support for growth. This has provided macroeconomic stability to the economy and helped strengthen the economy in an environment of global economic uncertainty.
Looking at next year’s Budget, CII has suggested sticking to the fiscal deficit target of 4.9 per cent of GDP for FY2025 and 4.5 per cent for FY2026. However, CII also pointed out that overly aggressive targets other than those mentioned could adversely affect growth.
CII also welcomed the announcement in the Union Budget 2024-25 to keep the fiscal deficit at a level that helps reduce the debt-GDP ratio.
CII suggested that the upcoming Budget could pave the way for central government debt to reach 50 per cent of GDP by FY 2030-31 and 40 per cent in the longer term.
CII has given three suggestions to motivate states towards prudent fiscal management.
First, states could be encouraged to institute state-level fiscal sustainability reporting.
Second, following the recommendations of the 12th Finance Commission, states have been allowed to borrow directly from the market. States also provide state guarantee in case of borrowing by public sector enterprises, which has an impact on the fiscal health of the state.
Third, the central government could create an independent and transparent credit rating system for states, thereby encouraging them to maintain prudent fiscal management. States’ ratings can be used to give them greater autonomy in deciding how to borrow and spend.
–IANS
ABS/ABM
