Fiscal consolidation means providing ways and means to strengthen the government finance and reduction in both deficits and accumulation of debt stock. It is critical as it provide macroeconomic
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It can be achieve in simple terms by increasing the revenue and reducing the expenditure. The following are the ways through which FD can be achieved:
Revenue side:
- Tax reforms both direct and indirect
- GST
- Simplification of filing return
- Formalisation of economy
- Rationalisation of tax exemptions
- Improving efficiency of tax collection and tax stability
- E assessment
- Reduction of discretionary powers
Expenditure side:
- Rationalisation of subsidies
- Cutting out non essential and unproductive activities
- Prioritisation of targeted areas
- Reducing cost of services
- Reduction of time and cost overruns on projects
- Politically motivated decision should be avoided like farm loan waiver
- Administrative reforms like use of IT infrastructure