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Government mulls cutting non-capex spending to avoid fiscal slippage

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Government mulls cutting non-capex spending to avoid fiscal slippage

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Finance ministry's monthly economic review is hinting at potential spending cuts. The report says government may need to rationalise non-capex expenses to avoid fiscal slippage. The report also expects inflation to stay above 6 percent in the medium-term.

The union finance ministry's monthly economic review is hinting at potential spending cuts. The report said the government may need to rationalise non-capex expenses to avoid fiscal slippage. The report also expects inflation to stay above 6 percent in the medium-term.
The report states, "As government revenues take a hit following cuts in excise duties on diesel and petrol, increase in the fiscal deficit may cause the current account deficit to widen, compounding the effect of costlier imports, and weaken the value of the rupee thereby further aggravating external imbalances, creating the risk of a cycle of wider deficits and a weaker currency."
The report also said the world could be at the risk of a stagflation but India may not be in that bucket yet. It also highlights growth, inflation, fiscal deficit and exchange rate as the major challenges for finance ministry and the government as a whole.
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