According to Reserve Bank of India Deputy Governor,an increase in government borrowing runs the risk of flooding the debt market which will make it expensive for companies to borrow.
He said that the disinvestment in public sector enterprises(PSEs) would help in alleviating the effects of the government’s borrowing in the country.
He also said serious rationalisation could be undertaken including cutting back on subsidies and programmes that are not delivering long-term growth and instead focus should be on providing education, health and infrastructure.
He also said that the Government could strengthen its commitment to fiscal responsibility by setting up an independent fiscal council as suggested by the Fourteenth Finance Commission.
The fiscal council could monitor the Government performance on sticking to the fiscal targets and roadmap by assessing regularly the progress in fiscal consolidation.
The government has resorted to stretching the Fiscal Responsibility and Budget Management(FRBM) targets with an aim to aid the growth process.For FY20,the Centre is targeting to get the fiscal deficit at 3.3% of GDP.