Economists would almost universally agree that fiscal discipline is a good thing. No government should aspire to live beyond its means. If it does, the consequences can be severe: higher inflation, higher interest rates, low private investment and lower growth.
QuickTake India's Aspirations
India's current government has justly been praised for its fiscal restraint. It's reduced the overall fiscal deficit and reoriented spending away from wasteful programs such as fuel subsidies and toward more productive investments in infrastructure. What it hasn't done, however, is deliver the sustained high growth of over 8 percent that India needs. To do so may require loosening the purse strings.
