LEAP years are a plus for finance ministers: the extra day bolsters annual output by a sliver and so flatters their record. Arun Jaitley, India’s finance minister, should be especially grateful for any boost to GDP on “leap day”, when he unveils his third budget. Although the Indian economy continues to outpace both richer and poorer rivals, the government’s fiscal options are narrowing.
Given jittery markets and total public debt of around 65% of GDP, a high figure for an emerging market, the question isn’t whether the government should cut its budget deficit but by how much. It is projected to be 3.9% in the fiscal year that ends on March 31st. The government has pledged to reduce the shortfall to 3.5% in the coming year and 3% the following one. But these targets are already less ambitious than ones Mr Jaitley had set previously, and ministers seem to be preparing the ground to push them back further—to bond markets’ consternation.
As always, politicians can craft a compelling case for another “one-off” delay in budget-trimming. Civil servants are expecting a...Continue reading
Source: Business and finance http://ift.tt/1TGULTc
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