Measuring Fiscal Deficit: Some Conceptual and Methodological Issues

S Asha Prasuna

The IUP Journal of Public Finance, 2005, vol. III, issue 1, 57 - 63

Abstract: The present paper critically reviews the International Monetary Fund's methodology on measurement of the fiscal deficit and assessing its impact. It highlights some of the existing controversies in use of such methods and some alternative indicators. It also examines the trends and relationship between fiscal deficit and other macroeconomic indicators of the Indian economy after the initiation of the fiscal consolidation program in 1991. It argues that given the unique nature of Indian economy, a sudden reduction in fiscal deficit may not be beneficial in the long run. While there is a need to curtail unproductive expenditure and increase the efficiency of government expenditure, the ad hoc measures of bringing down or suppressing the fiscal deficit as a number game ought to be replaced with a more meaningful and alternative long-lasting approach that suits the Indian conditions.

Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:icf:icfjpf:v:03:y:2005:i:1:p:57-63

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