Let me tell you a story of 2 brothers Karan and Arjun both of whom were educated and did well in their jobs respectively.
However, two years back Karan lost his job. Suddenly, his world changed. He had to start making compromises in his day-to-day life. He was also considering discontinuing the education of his children.
But fortunately, Arjun came to his rescue. He agreed to share his salary so that Karan’s life did not get disrupted.
Therefore, Arjun had to postpone many of his plans such as purchasing a car for his family.
For the next 6 months Karan got financial support from Arjun and managed to keep his problems at bay.
However, after 6 difficult months Karan finally got a job and his cash flow situation improved significantly.
Hence, his need for assistance also reduced.
Hence, Arjun decided to discontinue the financial support to Karan.
Having discontinued this financial support Arjun was in a good position to fulfill his plans of purchasing the car for this family.
The financial support that Arjun provided Karan was like the fiscal stimulus that governments /central banks provided to industry during the financial crisis whereas his decision to discontinue the support once Karan’s position improved is nothing but the financial consolidation of Karan’s account.
So, when we talk of financial consolidation what is meant is that because the Indian economy is back on track, a time has come to withdraw the fiscal support that was provided during the Covid-19 meltdown in 2020 so that the money could be put to better use from the economy.