Twin deficits again

The finance ministry’s decision to cancel the last tranche of Rs 12,000 crore of market borrowings—due this Friday—sends out a powerful signal as to how determined the government is to stick to its revised 5.3% fiscal deficit target. Though the actual announcement came as a surprise, the ministry’s attempts to curb expenditure have been visible—in December, the government actually had a positive saving of R8,230 crore—for many months now. Indeed, one of the reasons for the extremely tight liquidity situation is the refusal of the government to spend money.

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