"Government debt to GDP ratio is around 90 % (Source: ET Now). Total interest payment has reached 45% of the net revenue realizable by government in the coming years. The economy is in a recovering rapidly. Liquidity and monetary conditions are supportive for economic recovery. Globally, central banks are hiking interest rates to control inflation pressure in the economy. Given this background and lower impact of third wave of covid, we expect the government to focus on fiscal consolidation. We expect the next year fiscal deficit to be around 6 % of GDP and total borrowing programme to be in the range of Rs. 12.5 to 13 Lakh Crores. The government will also give a road map to reduce the fiscal deficit in coming years. The government will target aggressive divestment and facilitate steps for inclusion of Indian bonds in the global bond fund index. This will reduce supply pressure of government bonds in the domestic markets and control abrupt upward movement in government bond yields."

Q.i-What does the above case reflect on? List out the solution to tame the situation?

Q.ii-Is fiscal consolidation right approach to the problem? Why?