ECONOMIC JOURNALISM ASSIGNMENT
Financial Market Reporting-1
Presented By: Anuradha Pawar
Roll no.: 3009
Word count: 640
Growth Vs Fiscal Expansion
Pune: Growth and fiscal expansion are the indispensable duos in creating equilibrium in the economy. Whenever there is compensation between the two, the resultant is a macroeconomic imbalance. While aiming to reduce the fiscal deficit, policy makers tend not to plan for reducing the fiscal deficit too significantly because India is a developing economy at its rudimentary stage of growth.
Hypothesis: why are there fluctuations in fiscal deficit?
The trend in the fiscal deficit is notable through the public debt, which is the “mirror” of the same. “The combined debt of the central and state governments, which averaged 56% of GDP in the 1980s, rose to an average of slightly over 63% in the 1990s and climbed further to touch a peak of 81.4% in 2003-2004.” (Kumar, 17).
As India subsidizes fertilizers, the procurement price is a function of the subsidy that the government offers on various categories of fertilizers.
While in 2007-2008, the public debt fell to 74.7% of the gross domestic product (GDP). Fiscal deficit will be more in the coming months due to crude oil prices have been raising in the international market and Central Government has no option except to increase the prices of petrol, diesel and gas for recovering some extent of losses.
At current price levels, Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp are projected to lose Rs. 68,361 crore and oil ministry expects at least half of them to be made up by the finance ministry.
This was the result of the introduction of the Financial Responsibility and Budget Management (FRBM) Act, which mainly aimed at reducing the fiscal burden of the government. “The Act required the Government of India to bring down its revenue deficit by 0.5% of GDP each year until it touched zero,...