Fiscal Policy in Crisis in India: A Lesson for the Global Economy
Fiscal management is essential for price stability, stable economic growth and sustainable fiscal position. Thus, given objective of a prudent fiscal management, the operational instruments need not be static but necessarily should be dynamic in nature, evolving with economic circumstances. Illustratively, COVID-19 pandemic was one such instance, when the Central Government had to relax its pre-determined glide path towards fiscal consolidation in favour of fiscal stimulus to sustain and revive the sagging economy.
This paper attempts to document India’s prudent fiscal response to economic disruption caused due to COVID-19 pandemic and its impact on government efforts of fiscal consolidation. This paper is organized into five sections. Section 2 provides a brief account of Central Government efforts towards fiscal consolidation and the impact of COVID-19 pandemic on them. In the next section, India’s unique approach to fiscal stimulus in the times of global pandemic has been documented. Section 4 examines how India fares among its global peers in fiscal management during the crisis and the recovery thereafter. Finally, a brief conclusion has been presented.
Download the Paper