The Narendra Modi government is trying to reduce the difference between revenue and fiscal deficit by investing in natural resources and technology like spectrum bidding and coal mining auctions. But is this the only way to reduce the gap? Market expert Akash Jindal gives his views:
Selling of natural resources or selling of stake in certain companies is one of the ways to reduce a deficit, because deficit reduction is important for the country and for the economy. In case we have a higher deficit, then it has to be fulfilled by some means like raising loans or increasing taxes. So, it is always important that deficit should be reduced, says Jindal.
But the preferred way of deficit reduction should be that the wasteful expenditure of the government should be reduced, plus income should be increased. So, the best way to reduce deficit is to increase the income and to reduce the wasteful expenditure, he adds.
My ideal suggestion to the government is it should work more on reduction of wasteful expenditure and also increasing its income. How can the government’s income be increased? Now, in case the economy progresses, there would be more earning from taxes – direct and indirect. That is the way of increasing government’s income, he says.
So, yes, selling of some natural resources or selling of some stakes in PSUs is one of the ways to reduce deficit. But the preferred way of reducing deficit would be to reduce wasteful expenditure and to increase income. And as far as deficit reduction is concerned, I am totally with the government that it is very important for the country, he concludes.