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How should the government revive demand?

What happens when, with government expenditure unchanged at Rs 65 trillion, the FM decides to reduce the tax rate, mobilise less revenue and let the deficit widen by Rs 1 trillion?

Saral Bachaspati  |  New Delhi 

Saral Bachaspati

In the current economic slowdown, many claim that demand is the key issue that needs to be addressed.

The important question that arises in this context is: If the finance minister (FM) decides to revive demand, how should she do it? Chairing the session on Founder’s Day lecture at the Institute of Economic Growth on 15 November, Naushad Forbes posed precisely this question to the august assembly of economists (See reference 1). In his short and valuable intervention, Mr Forbes elaborated on what the government could do if it decided that it could tolerate an extra fiscal deficit ...

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First Published: Fri, November 29 2019. 01:10 IST
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