What fiscal policy when inflation is always lurking?

"There is growing concern that India will miss the fiscal deficit target of 3.2% of the gross domestic product (GDP) set in the Union budget for the year to 31 March," wrote Sinha and Morankar. Fiscal deficit is the excess government expenditure over government revenue. The government borrows from banks by selling bonds through the Reserve Bank to finance this shortfall. Banks are required to hold a certain portion of deposits in the form of government bonds, known as Statutory Liquidity Ratio. The RBI determines how much money banks have to set aside for SLR and presently that is set at 19.5%. Indian banks buy much more than the prescribed amount of these bonds because sovereign guarantee means that they are totally safe. The problem is that higher government borrowing leaves less money for private borrowing and the government borrows to pay interest on the bonds. "India has a debt-to-GDP ratio of 68%, which is highest among its emerging market peers. Indonesia has a government debt-to-GDP ratio of 24%, while this ratio for Thailand is 41%." The US has a debt-to-GDP of 108% and Japan's ratio is 240%, but the interest rate in the US is 1.25% and 0% in Japan, while it is 6% in India. Thus, interest payment is 24% of total expenditure for our government, while it is 9.5% for Japan and 11.2% for the US. That means the government has less to spend on development. Capital expenditure is 12-14% of total expenditure. So government spending should be counter-cyclical, which means that it should decrease expenditure when the economy is growing strongly and increase it, along with a higher fiscal deficit, when growth is down, as now. Growth in recent years has been due only to the drastic fall in oil prices, wrote M Chakravarty, as the price of crude oil fell from $114 per barrel in June 2014 to $39 in March 2016. The government increased taxes on fuel 11 times which helped in controlling fiscal deficit. Oil prices have risen to around $60 per barrel lately and this is already creating problems, wrote T Kundu. The government will either have to reduce taxes on fuel, which will reduce revenue, or allow prices to rise, fueling consumer inflation and making voters angry. A high interest rate increases government expense, so should there be a hefty cut in policy rate? Using interest rate for inflation targeting is bad for the economy, wrote P Sen. The sudden rise in the price of eggs by 50% is due to the Minimum Support Price, a higher price paid to farmers to increase their profits. Even so farmers are committing suicide because of financial distress. Inflation is inbuilt in the Indian economy. Any discussion must include that.