7  A credit-constrained firm is a firm which a) is rejected when applying for a loan, b) receives less than 75% of the desired loan amount, or c) is discouraged from applying because it believes its loan application will be rejected. 8  Bofondi, M., Carpinelli, L., and E. Sette, 2012. Credit supply during a sovereign crisis. Bank of Italy mimeo.
Fourth, reprioritisation of expenditures towards social sectors along with higher capital outlays is required to promote fiscal discipline without restricting operational efficiency of the Government. Fiscal empowerment would allow higher capital outlays and boost infrastructure and social sector spending with beneficial impact on domestic productivity, growth and employment. It is, thus, necessary to emphasise the criticality of quality of fiscal adjustment.