The government is missing the game plan that can facilitate sustained and aggressive monetary easing
The forthcoming 2016-17 Union budget will, more likely than not, settle for a higher fiscal deficit than the 3.5% of gross domestic product (GDP) announced in February 2015. Admittedly, there is still some sensible resistance to easing the fiscal constraint. However, some government officials have already made a case for easing to avoid a pro-cyclical fiscal policy. Consequently, the government will be on the defensive if it sticks to its fiscal deficit reduction schedule despite its concerns about growth revival.