Fiscal deficit to GDP ratio appears reduced due to inflation inflated nominal GDP, not genuine fiscal consolidation.
High nominal inflation inflated current price GDP and thus lowered the reported fiscal deficit to GDP ratio despite an absolute increase in the fiscal deficit; when GDP is valued at constant prices the deficit picture deteriorates. Large tax concessions and revenue write offs to the corporate sector have materially reduced receipts, while budgeted cuts to food and fuel subsidies, reliance on one time windfalls, and liberal short term capital inflows create additional fiscal and macroeconomic risks. (AI Summary)