Fiscal deficit had touched 6.46 per cent in 2009-10, the highest in a decade. The Finance Minister targeted a deficit of 4.8 per cent for 2013-14, which seems achievable as the year draws to a close. Revenue inflows are expected to boost the government's income. However, the government's fiscal stimulus packages have stretched finances.
A disciplined fiscal management policy will be the only way out. Government schemes need to be backed by corresponding reforms in income generation.
Reducing deficit number benefits all; the Government will have more resources at its disposal, FIIs see a financially disciplined Government and the country's ratings may go up, which makes India an attractive investment destination. At the same time, these factors create encouraging signs for investors to feel confident and invest in the markets.