Letter to BS: Covid taught us how we lag in application of microeconomics

This refers to the editorial ‘Managing public debt’ (July 21). Macroeconomics deals with the creation of wealth and growth indices, while microeconomics, guided by government policies after analysis of the needs of stakeholders, helps in understanding and designing how the wealth can be spent. 

Covid-19 has helped us realise that we lag in the application of microeconomics, which incurs infectious expenditure and debt. The unique problem amid Covid-19 is that every sector has been eroded of wealth and the ability to create it. Nations need massive deficit financing and more importantly its judicious allocation for optimum benefit with job creation at the core.

Yesterday (Monday), 27 European nations concluded their discussions on extra budgetary provisions for post-pandemic economic recovery. For every member nation, the allocation has been split into loans and grants. Amounts misspent would be deemed as loans and would incur penalties. Our central and state governments can emulate this.

R Narayanan  Navi Mumbai

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