Budget: Fiscal slippage a concern; health expenditure to up by less than 6%

Counter-cyclical policy requires fiscal contraction when growth is on the rise, especially if there are risks of a spike in inflation

Budget speeches always focus on the good news. Bad news, like the worrying slippage in fiscal consolidation this year, are pushed into the background. Arun Jaitley’s speech was no different. But the Budget’s impact on the economy requires a dispassionate assessment of the data.

The 2017-18 fiscal deficit ended up at 3.5 per cent instead of the targeted 3.2 per cent and the 2018-19 target is now raised to 3.3 per cent. In absolute terms, the fiscal deficit went up by 33.6 per cent in April-December 2017 and the revenue deficit by as much as 40.7 per cent compared to the