Cutting Fiscal Deficit has Become Obsession

Managing fiscal deficit seems to be more important for the Finance Minister of India and for this holy cause he increased the effective taxes on common folk than increasing the revenues by expanding economic activities and that too in times of crises where consumer confidence is so low. 

Increasing tax can be an option to manage deficit in an economy that is facing severe deficit problems. But it is dependent upon other macroeconomic indicators and factors. But it is always advisable that government should try to keep tax rate reasonable else that will result into black economy getting bigger with every passing day. And today it does not seems that situation is so worse that it needs to anyhow increase effective tax rate; corporate or personal. 

Deficit is not bad thing at all. It is a way to make the entrepreneurship more attractive rather. It is not possible for any economy and society to move upwardly if the entrepreneurs don't venture into new arenas with full of incentives. But across the world fiscal deficit has become so popular that countries are taking measures to cut fiscal deficit at any cost. And this is what that is costing the world economy hard during this period of crisis. Fiscal deficit must be controlled and managed but not like obsession. There is always right time for everything and taking measures to cut fiscal deficit at such moment is not right time for maximum of the economies in the world. Instead they must concentrate on increasing economic activities in their respective economies. Once the economic activities increase in these economies, the problem of fiscal deficit will be taken care over time as the economies will not need more fiscal support any more when economic cycle is upward.

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