Fiscal correction: Illusion and reality

The story of fiscal adjustment in India is one of missed opportunities. The crisis did initiate reforms in right earnest, but once the immediate probl ems were overcome, rather than achieving fiscal consolidation, the attempt in successive budgets has been to create the illusion of achieving fiscal c orrection rather than really achieving it. The government has been conceali ng deterioration in the fiscal balance by placing emphasis on the fiscal de ficit rather than more meaningful summary measures, and frequently changing its definition and method of measurement. Analysis shows that on a compara ble basis fiscal deficit reduction has been marginal. On the contrary, othe r fiscal indicators have shown significant deterioration. Thus the claims a bout fiscal adjustment are illusory. Fiscal consolidation in India perhaps requires another crisis.