Amidst the air of growth, the rising fiscal deficit is a cause for serious concern to the policy makers who are seeking the right balance between growth and deficit.

With less than a month to go for the Union Budget 2010-11 to be tabled in the Parliament, it is a perplexing situation for the Union Government, to maintain the right balance between growth and fiscal deficit. The Finance Minister maintained that a growth rate of 7.5-8% is realistic for the current year. He also stated that 9-10% growth would be achievable in the near future. But there are also serious concerns about steep fiscal deficit, which is estimated at 6.8% of the GDP. The FM also said that the current level of fiscal deficit could be `unsustainable' and it would be reduced to 5.5% in fiscal year 2010-11 and to 3% in 2011-12. The government had taken a conscious decision to provide fiscal stimulus to the economy to minimize the impact of the global financial meltdown, but it added to fiscal deficit. Now that the fruits of the stimulus packages have started flowing and the economy is now on a recovery path, the policy makers are in deep contemplation whether to roll back the stimulus measures or not.

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