Here, even as the Government and the Reserve Bank coordinated their crisis management efforts, there are dilemmas. Last year (2008/09), the government launched three fiscal stimulus packages which came on top of an already announced expanded safety-net programme for the rural poor, the farm loan waiver package and pay out following the implementation of the Sixth Pay Commission.
Together all these commitments raised the fiscal deficit from 2.5 per cent estimated in the budget to 6.2 per cent (as per pre-actual figures) by the close of the year. The budget for 2009/10 projects a fiscal deficit of 6.8 per cent of GDP.