Fiscal Policy

Fiscal Policy in India currently focuses on a calibrated "Glide Path" for fiscal consolidation, aiming to balance growth-inducing Capital Expenditure (Capex) with macroeconomic stability. The Fiscal Responsibility and Budget Management (FRBM) Act provides the statutory framework, which has now shifted its primary anchor from a rigid annual fiscal deficit number to a sustainable Debt-to-GDP ratio to ensure long-term financial health.

Impact/Targeted Segments

  • Bond Markets & Financial Institutions: Beneficiaries of reduced government borrowing, leading to lower yields and better liquidity.
  • Sovereign Credit Ratings: Global rating agencies monitoring fiscal discipline for rating upgrades.
  • State Governments: Entities incentivized to maintain fiscal discipline (typically <3% or ....
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