India’s fiscal deficit trend improvement has been mostly fortuitous

One would, of course not begrudge the government's intention of stimulating an economythat is staring at a slow recovery. 

The fact remains, however, that one of the reasons why the government's decision has generally been applauded rather than criticised is that the fiscal deficit (as a percentage of GDP) has been improving over the past few years.

However, the perceived improvement was due to sharply rising nominal GDP (because of the then-prevailing high inflation) rather than to adherence to fiscal discipline.

Societe Generale notes....

• In fact, over the past four years (between FY10 and FY14), when India's combined fiscal deficit (deficit of the central government and the various state governments taken together) fell from 9.3% of GDP to 6.9%, the deficit itself was growing at close to 7% per annum.
  
  
• However, since nominal GDP increased at close to 15% per annum during the same period, it brought down the level of fiscal deficit as a proportion of GDP. 
  
  
• To that extent, India has been slowly inflating its way out of its deficit problem. Despite this, however, its deficit still remains very high, especially in comparison to countries with similar levels of credit rating.