Highlighting the factors contributing to a high fiscal deficit in India, discuss the potential consequences of such deficit and suggest measures to ensure fiscal consolidation.

According to the Union Budget 2024-25, India's fiscal deficit was reached at 5.6%, indicating from an all-time high of 9.2% in 2020-21. Factors Contributing to High Fiscal Deficit: 1) High revenue expenditure => constituting nearly 19% of the total expenditure 2) Low direct tax realizations => only 11% of the population forms a part of the tax base, as compared to 23% in OECD countries 3) High levels of populist spending => 1.4% of GDP on loan waivers 4) Geopolitical supply shocks Consequences: High fiscal deficit => - Crowding out of private investment - High indirect tax burden - Poor credibility ratings by global firms - Increase in off-budget borrowings - Low capital expenditure Measures: - Re-digitizing the fiscal responsibility and budget management act - Establishing the Fiscal Stability and Deficit council - Exploring the prospects of taxing agriculture in some cases - Rationalizing subsidies and tax concessions Thus, as per the NR Singh committee, fiscal deficit should touch 2.8% by 2028, and the government needs to make reforms.