ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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UTTAR PRADESH-Opportunist Alliance

conventional deficit financing may put the interest rate structure under continuous strain such that what is perceived as a means to monetary stability may prove a serious dam- pener of real economic activity. Instead, a reasonable cap on the size of deficit spending each year would have been a more practical way of dealing with the situation. Of course, the cap of Rs 12,000 crore for the first half of 1997-98 and Rs 8,000 crore for the second half may turn out to be, on an average basis, not very different from the average intra- year deficit spending so far. What is cause for worry is the likely pressure on government finances and interest rates when the government vacates outstanding ways and means advances, particularly at the end of the year.

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