Fiscally, we are anti-Keynesian

Achieving fiscal balance should be govt's long-term plan, but the glide path should be a function of the state of the economy, with flexibility to overshoot during tough times

In the recently presented Budget, India’s fiscal deficit for FY 2017-18 got revised upwards from 3.2 per cent to 3.5 per cent of GDP and the target fiscal deficit for FY 2018-19 is set at 3.3 per cent. Though Moody’s has said that a slight slippage in fiscal deficit has no material impact on overall economic strength, the Indian rupee slid past 64 to the US dollar post-Budget, and bond yields hardened substantially. This begs a question: Shouldn’t government have some space to operate its fiscal policy? I argue that the stringency we are placing on the path of fiscal