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Time for a relook at the idea: Why not a per capita budget deficit

If high deficits were going to crowd out private investments or raise interest rates, it was seen as inimical to the political objective, says the author

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Per Capita Budget Deficit

T C A Srinivasa-Raghavan 

T C A Srinivasa-Raghavan

Back in 1986, when Rajiv Gandhi was stoking GDP growth by increasing the budget deficits, I wrote about the need for the notion of a per capita deficit. One of my economist friends, who has gone on to great glories, poked severe fun at me. But I still think he was wrong.

Thirty two years on, it might be worth taking a relook at the idea. It is rooted in two realities: universal franchise and increasing poverty/inequality. Basically, the issue is this: if a country has to incur a lot of welfare expenditure, which in a highly competitive democracy it must, should it tie the budget deficit to ...

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First Published: Sat, March 10 2018. 06:00 IST
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