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TMI BlogIndia needs to create additional Fiscal Space: Economic Survey 2014 – 15X X X X Extracts X X X X X X X X Extracts X X X X ..... India needs to create additional Fiscal Space: Economic Survey 2014 – 15 - News and Press Release Dated:- 27-2-2015 - News - India needs to create additional fiscal space in order to ensure macro stability and to create buffers for future economic downturns, says the Economic Survey, tabled in Parliament by the Union Finance Minister, Shri Arun Jaitley here today. Medium-Term Strategy T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Survey advocates a medium-term fiscal strategy to create this space. The space, it says, is necessary to insure against future shocks. The recommended strategy would also take India closer in fiscal performance, to that of its emerging market peers. The Survey outlines the two pillars of this medium-term strategy: 1. Reduce deficits a. Reduce fiscal deficit over the medium t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erm to the established target of 3% of GDP b. Move towards the golden rule of eliminating the revenue deficit c. Ensure thereby that borrowing over the cycle is only for capital formation 2. Expenditure Control and Expenditure Switching a. Maintain a firm control on expenditures, in order to achieve the above targets b. Improve quality of public expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e; shift away from public consumption (by reducing subsidies) towards investment Based on Fundamental Principles as well as History The medium-term fiscal strategy is based on fundamental principles of fiscal policy, as well as on the need to maintain fiscal credibility. The Survey invokes the following golden rule: Governments are expected to borrow over the cycle only to finance inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment, and not to fund current expenditures. Short-term targets should be set accordingly. This, the Survey argues, would assist the Government to take the Indian economy back to a durably higher growth path. These considerations are reinforced by legacy and credibility issues. Adhering to fiscal deficit target set earlier is essential to maintain credibility and provide policy stability. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Survey explains how an analysis of India s recent fiscal history too buttresses this strategy. Need for Fiscal Action in short-term too The Survey states that fiscal action cannot wait; it should continue in the upcoming year as well. It however adds that the need for accelerated fiscal consolidation has reduced, in view of reduced macroeconomic pressures. Targets comfortably attaina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble The Economic Survey assures us that concrete actions in the Union Budget to implement the medium-term fiscal strategy outlined above would lead to a comfortable attainment of the medium-term targets. India can thus balance i) the short-term imperative of boosting public investment to revitalize growth, with the ii) need to maintain fiscal discipline. - News - Press release - PIB Tax Man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agement India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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