India’s fiscal stance in recent years has puzzled many observers. Why would a developing economy with vast needs choose fiscal restraint at a time when global conditions seem to invite cheap borrowing? Why would a government prioritise contractionary budgeting when its own central bank pursues an accommodative policy?That puzzle has come into sharper focus thanks to a recent conversation between Monika Halan and Neelkanth Mishra, Chief Economist at Axis Bank and a part-time member of the Prime Minister’s Economic Advisory Council. Their discussion highlighted the rationale behind India’s fiscal strategy with unusual clarity. This is not simply about balancing the books for their own sake, but about creating the conditions for sustained, private-led investment while protecting sovereign credibility in an uncertain world.
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