Persistent fiscal deficit warranting huge borrowings, often at the cost of flow of reserves to the private sector, has been the predominant feature of the Indian economy. Increasing borrowings by the Government, both the Central and the State Governments, have to be strategically planned and tactically executed keeping in view the market conditions, liquidity situation and macro-economic implications.
This is evident in Graph 12, which shows the forecasts a year ago, the actual outcomes and our current forecasts. In contrast to the subdued inflation outcomes, employment growth has been stronger than we expected a year ago. This can be seen in the right-hand panel.