PARIS (PTI): Western donor countries and international financial institutions have voiced serious concern over the sharp deterioration of India’s fiscal performance in 1993-94 which has eradicated large portions of the gains in fiscal consolidation.
India’s continuing high fiscal deficit currently pose the most serious single threat to the attainment of its medium term development objectives the western donors warned at the annual meeting of the aid India consortium now renamed as India development forum.
They underscored the need to strengthen fiscal discipline without which they felt India will be unable to reap the full benefits of economic reform.
Joseph Wood vice president of the world bank who presided over the India development forum meeting at the world bank office here said as recognized by the Indian government the sharp deterioration of fiscal performance in 1993-94 threatens the future stability of the economy reduces fiscal Nexibility and undermines the credibility of the overall structural reform program.
He said the widening fiscal deficit has already contributed to the recent resurgence of inflation which has now exceeded the critical threshold of 10% and kept long-term domestic interest rates high.
The IMFs Central Asia director said it will be crucial for India therefore to return quickly and decisively to the path of deficit reduction in order to lower inflation ensure that the already large public debt burden remains manageable and facilitate the recovery of private investment.
Article extracted from this publication >> July 8, 1994
