Montek Singh Ahluwalia Urges India to Tackle High Fiscal Deficit for Economic Growth

Montek Singh Ahluwalia, the former Deputy Chairman of the Planning Commission, has expressed concerns about India's high fiscal deficit, which he believes is hindering private investments. He emphasized the need for a clear plan to reduce the fiscal deficit of both central and state governments to achieve economic growth goals.

Ahluwalia noted that India's fiscal deficit is significantly higher than other developing countries, with a combined central and state deficit estimated at nearly 8% of GDP. This is more than double that of other developing nations. He stressed that reducing the fiscal deficit is crucial for a private investment-led economy and achieving an 8% growth rate.

He also highlighted that state governments often disguise their deficits by borrowing through public sector enterprises, adding to the fiscal burden. Ahluwalia called for a review of state expenditures, particularly politically motivated freebies and subsidies. He criticized the fertilizer subsidy, arguing it benefits the industry more than farmers and harms soil health.

Ahluwalia pointed out that India's current growth rate is around 6.5%, but to achieve the "Viksit Bharat" vision by 2047, the growth rate needs to increase to 8-10%. He urged the government to implement strategies to meet these targets, emphasizing the importance of fiscal prudence and strategic economic planning.