The idea of fiscal prudence is the key to bring robust macro-economic stability in the country. Analyse (200 Words)
Refer - Business Line
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PANDI SANTHOSH RAJA S 2 years
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IAS Parliament 2 years
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IAS Parliament 2 years
KEY POINTS
· The pandemic has already made debt dynamics unsustainable in several economies.
· IMF research shows that a one percentage point unanticipated contraction fiscal balance reduces the CAD, on average, by 0.8 percentage point of GDP.
· This has accentuated CAD to unsustainable levels in some countries. Careful countervailing policy action is required. Open economy considerations will rule monetary and fiscal policies, going forward.
· Fiscal policy, and not monetary policy, will determine long-term interest rates in the Indian economy. More of fiscal restraint will be needed to avert interest rate shock.
· Macroeconomic conditions are evolving better than anticipated. The key metric of nominal GDP growth was 19.5 per cent in 2021-22 against the base case projection of 13.5 per cent by the Finance Commission.
· This enabled them to expand the fiscal deficit by 6.4 percentage points in 2020 after the pandemic struck. Such is the power of counter-cyclical fiscal consolidation.
· Dollar strength can remain the bugbear for EM (emerging market) currencies till the middle of next calendar year and we must bulwark against such outcomes
· It is best to stay focused on maintaining macro-financial stability and not overly worry about growth at this stage. Such is the nature of policy trade-offs.
K. V. A 2 years
Pls review
IAS Parliament 2 years
Good attempt. Keep Writing.
