Nadeem & Fiscal Deficit- An Economy on transformation to a brighter side. - The Fearless Indian
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Nadeem & Fiscal Deficit- An Economy on transformation to a brighter side.

  • Guest Writer
  • February 8, 2018
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Before going through the article a disclaimer: This Article is for the one  who talks logically and  debate & does not illogically talk about 2002, Gau Rakshak, fake Videos or hate messages .

 

Let’s start with a Scenario , Nadeem has a Joint Family and among all the brothers he is the eldest one ,for past few years , Nadeem is not able to manage his family finances , there is huge debt on his family,  and even the brothers of Nadeem  do not clarify him what they are working on and every rarely they sit and talk and let Nadeem know about the money earned by them and spend , So majorly the expenses are borne by Nadeem himself and the income is not sufficient to survive .For which the family members and children also remains unhappy .

What would be your take in this situation if you were Nadeem-

  1. Give some temporary gifts & chocolate to the members and children at the house to make them happy.

And a result of it, somewhat the ambience of home will improve people will at least smile for some moment.

  1. You may not like this option , Nadeem has to get really strong , ask his brothers to let the income known & deposit it in one place , make some temporary adjustment , Pay off the debt to make future better by making the financial situation healthy .

Well, if you look carefully the second take is one which will take you to logical one , not the first one .

So, let’s now take real scenario example -Fiscal Deficit of India,

If you look at 2013 data March year ending, Indian GDP was at 5.6 % , which then increased to 6.6 % in 2013-2014 while the general elections were taking place and has always been growing year on year.

A GDP growth showcase how rapidly our economy is growing, if it’s growing, so will businesses, jobs and personal income.

 

 

GDP is the monetary value of all finished goods & services produced within its geographical boundary in a year/ specific time period. It is calculated as following:

GDP = (All private consumption + Govt. spending + Capital Investment + Total export – Total import) This is called consumption method of calculation as what is produced is either consumed or invested.

 

Now when we know about our GDP,  let also have look at our Fiscal deficit, the difference between total revenue and total expenditure of the government is termed as fiscal deficit. It would give us a better picture of how isIndia performing if we are now borrowing less to spend on expenditure.

Usually Government expenses, inflation and lower revenue are among some of the main factors that point to fiscal deficit, So if the fiscal Deficit is getting lower, the three factor (revenue gets more, inflation rate decreases, government expense reduce) stated above tends to gets stronger and these are the deciding factor for the economy of a country .

Also one major factor are subsides more when the earning is less, previous governments has given lots of subsidies but never worked on the earning part as compared to the current government or else the time they have been in power there should have been a drastic narrowing of CAD and FD which has not happened.

In fact the action on ground also indicates that there has been attempts of government to increase the revenue by selling bonds , Increasing taxes , curbing import of gold.

 

 

If you look at the graph above you will understand that there has been significant decrease in fiscal deficit which is remarkable achievement of Modi government.

if you also look at Current account deficit it is also narrowing since 2014 but last three till June 2017 the fiscal deficit has widened and it is widely assumed because of GST , Since due to GST the exports has fallen whereas Imports remained and increased a bit more than before .

But the strategies taken by government is towards narrowing of CAD and FD, which in return will make a healthier economy, though for time being , there will be  some rigorous reforms , We may have to face since, We need to transform !

Sources: Google . Yahoo

 

– Jaya Chowdhury 

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