Fiscal consolidation is a process where government’s fiscal health is getting improved and is often indicated by declining fiscal deficit. Improved tax revenue realization and better aligned expenditure are the components of fiscal consolidation that brings fiscal deficit to a manageable level. Improved tax revenue realization and controlled expenditure are thecrucial components of fiscal consolidation.
According to Financial Time’s lexicon, “Fiscal consolidation is a reduction in the underlying fiscal deficit. It is not aimed at eliminating fiscal debt.”
