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In the article, “Is fiscal deficit of 3.2% of GDP written in stone?” (October 12), Anand P Gupta discusses an important subject of how much the Budget deficit should be.
I agree with him that the limit to the Budget deficit should be based on the productivity of sectors. If the productivity is high or the potential to raise productivity is high, more financial resources should be allocated to them so that the present limit to growth can be raised. What is the productivity of various sectors in India? One example will suffice to say that there are serious issues here.
India takes pride in the White Revolution, having an ample supply of milk. For vegetarians in India, milk consumption is crucial. This year, the retail price of milk per litre in Pune is Rs 42, which, in terms of US dollar, is about 80 cents. This works out to about $2.50 per gallon. In the United States, bottled milk costs $1 per gallon. Also, the average income of milk consumers in India is around one-tenth of the per capita income in the US even at purchasing power parity. Relatively speaking, productivity in India is low, which puts consumers in hardship.
Of course, the budget deficit in the United States has skyrocketed, but that is a subject to worry about at the global level.
Chandrashekhar G Ranade Washington DC
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