India: How to boost economy amid Covid 19 pandemic
Here are the five points
Thursday, 30th April 2020
The pandemic has wrecked the global economy. Are there any ways to pick up the bits and pieces and start fresh again? Government is doing its best.
These 5 tips can help economy to return to normalcy:
- Fiscal deficit
To boost liquidity within the system, the government should bridge the gap between revenue and expenditure by borrowing more. There will be inflation and an increasing fiscal deficit but the country’s economy can become normal again.
- Monetizing the fiscal deficit
"Monetizing deficit, in other words, means RBI purchasing government bonds in the primary market and printing more money to finance this debt". Until 1990s, this was the norm. From April 1st, 1997, it was replaced by WMA.
- The downside
Monetizing fiscal deficit by RBI may lead to higher inflation through unproductive spending.
- RBI says
“We are dealing with a pandemic superimposed on a slowdown. The response has to be a coordinated one”, Shaktikanta Das, governor of RBI says. He added, “No view has been formed” in the problem yet.
Source: Economic times
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