Q) India's growth in the first quarter of 2020-21 at (-) 23.9% showed one of the highest contractions globally. The challenge is to minimise this sharp contractionary momentum in real and nominal growth. Critically analyse. (250 words)
Why this question?
- India's growth in the first quarter of 2020-21 at (-) 23.9% showed one of the highest contractions globally. The 2020-21 real GDP growth for India is forecast in the range of (-) 5.8% as per the Reserve Bank of India’s Survey of Professional Forecasters. Thus the question.
Introduction: The economic situation warrants enhanced government expenditure. But there are not adequate resources to support a high fiscal deficit.
Body: Discuss the following aspects
- Concerns:
- Sharp fall in GDP
- No fiscal stimulus
- Revenue erosion
- Limits to fiscal deficit
Way forward:
- Balancing with fiscal deficit
- Indirect debt monetisation by RBI
Conclusion: Summarize the above discussed points.
