GS-3, Indian Economy

Adequacy of Counter Measures against Economic Slowdown

The counter measures declared by the Union Government against the economic slowdown may not be adequate for a revival of the economy. The Role of Fiscal Policy in Economics: In 2005, a Nobel laureate in economics claimed that the fiscal policy, associated with profligacy, had no role at all and the problem of depression has been… Continue reading Adequacy of Counter Measures against Economic Slowdown

Editorials, GS-3, Indian Economy, Uncategorized

For a paradigm shift in fiscal deficit

Article Link Whenever there is debate on budget, fiscal deficit, by default, occupies the centre-stage. However, this year it found a special mention in Finance Minister’s budget speech. Finance Minister Arun Jaitley, in his speech, said that “there is a suggestion that fiscal expansion or contraction should be aligned with credit contraction or expansion respectively,… Continue reading For a paradigm shift in fiscal deficit

GS-3, Indian Economy, Uncategorized

Relation between fiscal deficit and bank credit

There is  an inverse correlation between fiscal deficit (fiscal expansion) and bank credit (monetary expansion). That is, if credit growth falls, fiscal deficit may need to rise and if credit rises, fiscal deficit ought to fall — to ensure adequate money supply to the economy. The FRBM Act says it cannot borrow more than 3… Continue reading Relation between fiscal deficit and bank credit

GS-3, Indian Economy, Uncategorized

Anatomy of revenue deficit

Context: India’s ever growing fiscal deficit and its efforts at fiscal consolidation Fiscal Deficit– when a govt’s total expenditure exceeds its total revenue Fiscal Consolidation – policy aimed at reducing govt deficits and debt accumulation Causes: The “golden rule” of economists suggests one must borrow to invest not to consume. However, India has been borrowing to… Continue reading Anatomy of revenue deficit

Editorials, GS-3, Uncategorized

A Bold Disinvestment Strategy Needed

Article Link One of the biggest disappointments of 2015 has been the inability of the government to move forward on even the modest targets of disinvestment of Rs 69,000 crore ($11 billion)—especially strategic disinvestment of R28,000 crore ($4 billion). It should be noted here that if the government wants, it could move on disinvestment aggressively… Continue reading A Bold Disinvestment Strategy Needed