The RBI has surprised the markets by this strong move towards policy sequencing of inflation containment prior to economic growth in the recent MPC meetings. Since May 2020, indeed the policy imperative of RBI has been “whatever it takes” to tackle the economic growth recovery process. However, with the war in Ukraine and mounting inflationary pressures, price stability has become the significant concern for RBI. The ever-mutating coronavirus would continue as a crucial determinant of macroeconomic uncertainties.
There is an inherent danger of economic mismanagement in populism, and the ongoing Sri Lankan crisis proves the argument. Gotayba Rajapaksa’s presidency is marked by successive disastrous economic policy decisions ranging from tax cuts, freebies, and anti-modern policies such as the ban on chemical fertilizers, so on and so forth.
For India’s urban areas to become more growth-oriented and productive and to increase the
capacity of the administrators, it is critical to build an excellent urban infrastructure, with
efficiency in service delivery and funding at the top of the priority list.
Research on national and sub-national fiscal responses to sports promotion in schools through development of infrastructure is sparse. This paper examines whether the states’ and centre’s sports expenditures have led to improved sports infrastructure as playground facility at the school level in all the states combined. The empirical results suggest that the states should increase their efficiency in public sports spending, which is not only low but also characterised by arbitrariness especially when the implications of the central government’s budgets are seen to have remained insignificant in order to encourage the states to provide the playground facility in the schools.
The current situation of the Indian economy and gigantic mismatch of fiscal decisions in contrast to the apex bank portrays a similar situation and are thus costing efficiency and seeping sluggishness.
In sum, revenue contraction, expenditure-side stimulus measures, and low denominator GDP – these three factors have collectively contributed to the high fiscal deficit in 2020-21 RE.
At first sight, the package aims to tackle the issue from the top, giving out money to banks and enterprises but in India’s case, it won’t be enough as unlike any other major economy, we are facing a subsistence crisis in the case of low-skilled labourers.
. The government’s estimate of 10% nominal growth in GDP for next year with retail inflation currently at 7.35% is worrisome as it indicates a real growth rate of 2.5%, lagging at the tax buoyancy front. With this statistic and the option of new tax slabs, it is necessary to estimate and observe the interaction effect of these variables. Will the government be able to meet its fiscal deficit target with a negative effect of tax buoyancy and elasticity?
While the finance ministry tries to address the slowdown by spending beyond what their pockets allow, it must not forget to ensure that the numbers are credible over the medium term. Moreover, it’s time we discuss about the credibility of finance ministry as much as we bat for a credible central bank.
The steps taken by FC XIV towards strengthening the panchayat planning processes through fiscal decentralisation are significant. Now, when Finance Commission XV will be giving its recommendations, it is important for the government to consider the above challenges for effective utilization of these funds.