As India is facing major demand deficiency, the Government of India needs to step in to increase the public spending. Explain (200 Words)
Refer - Business Line
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IAS Parliament 3 years
KEY POINTS
· The CSO’s recently released advance estimates of GDP, which are explicitly intended “to serve as essential inputs to the Budget exercise” provide some indications of how the fiscal stringency of the pandemic year played out in terms of macroeconomic indicators.
· The CSO admits that the estimates are based on limited data and compiled using the Benchmark-Indicator method .
· The latter reveals that when 84 per cent of households in the country suffered a decline in their income in a year marked by tremendous loss of life and livelihoods, the number of Indian billionaires grew from 102 to 142.
· This is clearly terrible from a welfare perspective, but it also has major macroeconomic implications. An economy of India’s size cannot be sustained for very long by demand from a tiny minority of privileged large companies and wealthy individuals.
· At some point, therefore, the impoverishment of the mass of people inevitably reflects in declining domestic demand, which in turn impacts negatively on domestic sales and profitability of even the large capital that is currently benefiting at the expense of smaller enterprises.
· For possibilities for a stable and equitable economic recovery, they must go beyond the usual finance-driven obsession with the fiscal deficit to looking at these numbers.
Manish 3 years
IAS Parliament 3 years
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SUNNY KUMAR 3 years
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IAS Parliament 3 years
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