The survey then comes to the point it wants to make. The various aspects of the fiscal problem, it says, namely, the fiscal deficit, the revenue deficit, unproductive expenditures and unsustainable subsidies are now fairly well-known. What is needed is "political consensus on this issue in terms of both constitutional and administrative measures that need to be taken". After elaborating on the damage that a high fiscal deficit can inflict on the economy, the survey decides to be a little less coy by adding that "the time has perhaps come to reconsider the issue of constitutional limits on the deficit as well as to take up thechallenge of re-engineering government". The logic of the plea cannot be wished away. For the last seven years, attempts to rein in the fiscal deficit have gone in vain. Sure enough, there were good reasons for the failure: notably, the award of the pay commission. But by 1999-2000, the award, it is only reasonable to expect, has been fully absorbed. But governments, irrespective of their political complexion, have a way of overshooting expenditure, and shying away from raising tax revenue. The latter has resulted, as pointed out by the survey, in a decline in the tax-GDP ratio.

The trouble with a statutory limit on the fiscal deficit is that it would leave the government free to raise non-plan expenditure to the hilt, and squeeze out capital expenditure altogether. This is precisely what the government has been doing in the name of fiscal stabilisation even without a statutory cap. What is thus required is a sub-cap on the revenue deficit, and this one should zero over a period of years. This, in turn,will require a target (statutory or otherwise) on the tax-GDP ratio. The government has been rather lax in garnering tax revenues. It has obfuscated this with vague talk about expanding the tax base. Though the survey has not been explicit about the statutory sub-targets, it has implicitly hinted at them. The question is, can the government be forced to confine itself to the cap on revenue expenditure? In any case, constitutional caps will require a consensus. This is unlikely in the prevailing political milieu.

Fiscal consolidation is perceived to be financial conservatism. This is largely because gains from expenditure switching from a curtailed bureaucracy to health and primary education or from elimination of non- merit subsidies into infrastructure investment are not clearly perceived. Deep down the line, the political class does not see the merit of downsizing government, letting entrepreneurs (big and small) flourish, and giving a big push to exports in support of high growth. Reform andliberalisation are seen to be exogenously inspired, as of now. It has yet to be related to the political economy of growth (a task that could well be taken up by the Planning Commission). This is the reason why fiscal consolidation has not found favour with two successive coalition governments. Political unwillingness can be hardly got round with constitutional caps. The survey's advocacy of statutory limits (and sub-limits) rings of despair.