INDUSTRY
CII tells government not to be “overly aggressive” in fiscal consolidation
- IBJ Bureau
- Dec 09, 2024
The Confederation of Indian Industry (CII) has urged the Centre not to be overly aggressive in cutting fiscal deficit in the upcoming Union Budget. Instead, the industry body has suggested that the government should stick to the fiscal deficit target of 4.9 per cent of GDP for FY25 and 4.5 per cent for FY26 to ensure that economic growth is supported.
In its submission for the Union Budget, the CII has pointed out that “overly aggressive targets beyond the ones mentioned could adversely affect growth”.
According to the Union Budget 2024-25 plan to keep the fiscal deficit at levels that help reduce the debt-to-GDP ratio, the CII has said that the forthcoming Budget could lay out a glide path to bring the Central government’s debt to below 50 per cent of GDP in the medium term (by 2030-31) and below 40 per cent in the long term.
Such an explicit target will have a positive impact on India’s sovereign credit rating and further on the interest rates in the economy, it has added.
“To aid longer-term fiscal planning, the government should consider instituting fiscal stability reporting. This could include issuing annual reports on fiscal risks under different stress scenarios and the outlook for fiscal stability. The exercise will help forecast potential economic headwinds or tailwinds and assess their impact on the fiscal path,” it has said.
Report By
View Reporter News