How will India Overcome Fiscal Crunch ? | UPSC

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IASbhai Daily Editorial Hunt | 9th May 2020

You don’t have to be great to start, but you have to start to be great.– Zig Ziglar

Dear Aspirants
IASbhai Editorial Hunt is an initiative to dilute major Editorials of leading Newspapers in India which are most relevant to UPSC preparation –‘THE HINDU, LIVEMINT , INDIAN EXPRESS’ and help millions of readers who find difficulty in answer writing and making notes everyday. Here we choose two editorials on daily basis and analyse them with respect to UPSC MAINS 2020.

EDITORIAL HUNT 75:“Slower growth and a tighter fiscal

       SOURCES:   THE HINDU EDITORIAL/EDITORIALS FOR UPSC CSE MAINS 2020

C. Rangarajan & D.K. Srivastava

C. Rangarajan is former Chairman, Prime Minister’s Economic Advisory Council and Former Governor, Reserve Bank of India. D.K. Srivastava is Chief Policy Advisor, EY India and former Director, Madras School of Economics.

 

      HEADLINES:

Slower growth and a tighter fiscal

      CENTRAL THEME:

India slid into the pandemic crisis in the backdrop of economic downslide; fiscal stimulus has to be structured

SYLLABUS COVERED: GS 3:Economy : Fiscal deficit

      MAINS QUESTION:

The impact of COVID-19 will be debilitating for the global as well as the Indian economies. Give a rough figure of growth prospectus of the next fiscal year -(GS 3)

      LEARNING: 

  • GVA predictions from various institutions.
  • Growth Projections
  • What are the liabilities of the Government
  • Judicious allocation of resources .

      INTRODUCTION: 

  • Various institutions have assessed India’s growth prospects for 2020-21 ranging from:
  • 0.8% (Fitch) to
  • 4.0% (Asian Development Bank).
  • The International Monetary Fund (IMF)  at 1.9%, China’s at 1.2%, and the global growth at (-) 3.0%.

The actual growth outcome for India would depend on: the speed at which the economy is opened up; the time it takes to contain the spread of virus, and, the government’s policy support.

      BODY: 

      IASbhai Windup: 

Expenditure on construction of hospitals, roads and other infrastructure and purchase of health-related equipment and medicines require prioritisation.
 

  • These expenditures will have high multiplier effects.
  • This gap may be bridged by enhancing net capital inflows including borrowing from abroad and by monetising some part of the Centre’s deficit.
  • Monetisation of debt can at best be a one-time effort.

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