Sustainable economic growth and poverty alleviation are
principal objectives of the developing countries. The present study present
a historical picture of fiscal situation of four South Asian economies i.e.
Pakistan, India, Sri Lanka and Bangladesh in descriptive manner and it also
analyses its consequences for the economic growth and poverty reduction.
Study reveals that confined revenues and savings coupled with rising
expenditures have caused a situation of persistent fiscal deficit over the
years. Coupled with that, most of the countries are also facing current
account deficit. Resultantly, what is known as a ‘Twin Deficit problem’ has
emerged. If the deficit is filled by debt then countries have to spend a
considerable portion of their GDP on interest payments of the loans. The
need to service debt obligations is undermining the economic performance
and resulting in collapse of development planning. Because debt obligations
and expenditure on debt servicing becomes a resource drain for already
limited revenues and is halting economic growth and poverty reduction
efforts. In view of that it is suggested that to achieve high economic growth
and reduce poverty there is a need to enhanced efforts for macroeconomic
stability particularly countries should focused to enhance their revenues.