Let me move on to the third question: is financial innovation good or bad? 20. This is admittedly a clichéd question and the boiler plate answer is that: “All innovation is good. It is not innovation per se, but how that innovation is used that makes it good or bad”. This is true everywhere, including in the financial sector.
This is a blunt but safe way of de-linking fiscal adjustment from democratic pressures. Second, we must focus on the quality of fiscal adjustment, not just chase a numerical target. The ratio of capital outlay to GDP for the Central Government has stagnated between 1 and 2 per cent of GDP since the early 1990s from around 2-3 per cent in the preceding decade.