INDIA’S PUBLIC FINANCE MANAGEMENT AND ADMINISTRATIVE SYSTEMS STILL RUN ON MANUAL SYSTEMS OF FILES AND CHEQUES In the run up to Budget 2016, Minister of State for Finance Jayant Sinha had raised a very pertinent issue. He tweeted: “Important to understand constraints of the government. Should we tax more, spend less or borrow more? Careful balance needed.”
Sinha’s concern stems from the fact that India’s fiscal deficit is financed mostly through domestic sources, and nearly 85 per cent of it comes from market borrowing. Last year, the government had paid interest of nearly 3,00,000 crore. In essence, if the government could cut down on its borrowings, it could reduce interest payments and, thereby, reduce the overall deficit.
For instance, when Finance Minister Arun Jaitley pledged 3,45,000 crore this year to…