Rescue operation

In the current economic downturn the so called "Blooming Indian economy" is struggling to pull down it's fiscal deficit which has hit a new high of 6 percent. The normal benchmark of fiscal deficit for a growing economy is around 5 percent. Anything above 5 percent is a matter of grave concern for any developing economy. Fiscal deficit is calculated as government earnings through taxes less government expenditure. If the growth rate falls below the actual expenses, the fiscal

deficit increases. Government has been trying to achieve the objective of reducing the fiscal deficit by privatising some of the departments like electricity which is an approach similar to selling off one's family silver which has been inherited from fathers and forefathers. The governement can no longer interfere and can not exercise any kind of authority over such privatised departments. One of the rescue operations which might be adopted is to take a middle path popularly known as disinvestment wherein the government can disinvest 49 percent of its holdings in public sector undertakings while retaining 51 percent stake. By doing so it is not letting go off its family silver by maintaining a strong hold over economy, pitching in with beneficial schemes whenever the situation demands. Such a rescue operation can lead to a tremendous growth rate lowering the fiscal deficit, being less error prone at the same time. The sad part of the story is that the government is not even dis investing 10 percent of its holdings currently. While the indian economists may have their own reasons for not adopting such a strategy but tentative measures with shirt-cuff calculation can be adopted with a serious look into disinvestment especially in the current recessionary trends.