Budget 2013: UPA's fiscal mismanagement has weakened India's economy

.....The political difficulty in rolling back what was meant to be temporary spending to boost a troubled economy made it a long-term challenge to manage the deficit. Former RBI governor Y.V. Reddy highlights the distinction between the structural and cyclical aspects of the fiscal deficit. In his book Economic Policies and India's Reform Agenda, he suggests the stimulus package has become a structural problem. "There is, perhaps, a structural deterioration in the fiscal situation," he writes. "The nature of stimulus has been such that the consumption expenditure and the committed expenditure have increased." In a recent interview with Business Today, he emphasised that a stimulus was something that would be withdrawn. He said: "You have to make a distinction between stimulus [and structural issues] - something you can do now and remove in normal circumstances.".....

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