Higher inflation thus entails higher net government expenditure, leading to higher gross fiscal deficit, other things remaining constant. As the Union Government is currently under the fiscal consolidation program, unless inflation is controlled, it may be difficult to check revenue expenditures. Inflation control will help achieve fiscal consolidation without cutting capital expenditure.
In  BIS central bankers’ speeches  3  fact, it is the quality of fiscal consolidation which matters much as this helps to improve investment climate in the country. 11. The challenges emanating from production and productivity constraints, particularly in the manufacturing sector and infrastructural deficits can to a large extent be met by sustainable bank financing.