The fiscal consolidation challenge

A few weeks ago, Finance Minister Arun Jaitley had said he had received conflicting opinions on the fiscal consolidation road map that should be adopted in the Budget for 2016-17. Perhaps this explains the kind of dilemma the government faces on this count. Here are some views of those who had advised the governments of the past:

"If we want to evolve a credible medium-term strategy for fiscal consolidation, we need to replace the existing FRBM Act with a modern legislation"

Montek Singh Ahluwalia, Ex-vice-chairman of erstwhile Planning Commission

"It's best to take the finger off the 'pause button' on fiscal consolidation and target 3.5 per cent of GDP for fiscal deficit for FY17"

Shankar Acharya, Former chief economic advisor

"Frequent changes in plans cast doubts on credibility. It is best to stick to the set targets through expenditure & revenue adjustments"

Ashok Lahiri, Former chief economic advisor

"If the govt delivers a fiscal deficit target close to 3.5%, there will be at least a 25 bps - maybe even a 50 bps - rate cut"

Jahangir Aziz, JPMorgan economist and former advisor in the finance ministry

"If he (Jaitley) strays from the path of fiscal rectitude, he must reassure fiscal hardliners by indicating when he will be virtuous again"

Nitin Desai, Former chief economic advisor

"It is a pity that the entire focus of fiscal theologians is on fiscal deficit, while it is far more critical and important to focus on reducing RD"

Rajiv Kumar, Former economic advisor in FinMin

FRBM:Fiscal Responsibility and Budget Management ; RD: Revenue deficit
Source: Media articles