Growth is another aspect of Indian economy that needs to be taken care of by the Indian government. In the last two five year plans, the average GDP growth rate in Indian economy was around 8%; however, the same is revolving around 4.5% now, which is hardly sufficient in view of the challenges faced by Indian economy. We need to accelerate growth back into the bracket of 8-10% to gain from the demographic profile of India. For this it needs to bring a lot of changes in overall economy.
From the below graph it is clear that there had been very high level of fiscal deficit and this is upsetting picture for a slowing economy. Therefore, the government instead of going for populism must ensure fiscal prudence.
The fiscal deficit must be brought around 4-4.5% or at max 5% (subjected it converts deficit into revenues) for better exchange rate and other economic parameters. From the newspaper reports about the revenues collection, the path the fiscal prudence by the government seemed to be a difficult choice by government seeing the proposed expenditures and promises made by BJP during recently concluded election as at present it does not have too much scope for higher fiscal deficit.