Cafe Economics | A new fiscal framework4 min read . Updated: 25 May 2016, 03:59 AM IST
The move to a flexible fiscal target based on potential output will be welcome, but it will suffer from a major credibility problem unless there is an independent fiscal council that does its own analysis of the budget numbers
It is no secret that Indian fiscal policy suffers from a serious deficit bias. The consolidated fiscal deficit in India has been far higher than the comparable budgetary gap in other emerging markets (see chart).
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