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India and Pakistan are in the same fiscal boat. Both have set almost identical targets to reduce their respective fiscal deficit and revive economic growth.  

Pakistan Government is committed to reducing its fiscal deficit (FD) to 3.5% of gross domestic product (GDP) by the end of 2016-17.  The Indian Government has not yet announced FD target for that year. But its FD target for 2015-16 is 3.6%.  

The means to achieving these targets and the underlying circumstances are, however, relatively different for both countries. Pakistan has embarked on fiscal consolidation under its obligations flowing from the economic restructuring loan that it has taken from IMF. Pakistan has embarked on big-ticket reforms that include privatization of 31 enterprises, unwinding tax benefits-centric crony capitalism, phasing out electricity subsidies and foreign trade reforms.  

India, on the other hand, has embarked on fiscal consolidation to ward off risk of downgrade by credit rating agencies. It also wants to avoid going to IMF again for fresh restructuring loan. 


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