ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
-A A +A

Macroeconomic Policies for India's Growth Crisis

Instead of focusing on predetermined fiscal targets that are unlikely to be realised, India's fiscal adjustment should be calibrated to the recovery and a rebalancing of demand from the public sector to the private. This is best done by targeting the structural rather than the cyclical fiscal deficit. There should also be a sharp shift in the composition of the deficit from consumption to addressing supply-side bottlenecks through public investment in infrastructure. Unlike public consumption which can crowd out private demand, public infrastructure investment has higher fiscal multipliers and can crowd in private investment.



Subscribers please login to access full text of the article.

New 3 Month Subscription
to Digital Archives at

649for India

$20for overseas users

Get instant access to the complete EPW archives

Subscribe now

Comments

(-) Hide

EPW looks forward to your comments. Please note that comments are moderated as per our comments policy. They may take some time to appear. A comment, if suitable, may be selected for publication in the Letters pages of EPW.

Back to Top