Crafting a fiscally neutral stimulus

10 Aug 2019

The Indian economy is experiencing a slowdown. Demand is tepid. Market sentiment is adverse. A normal fiscal stimulus to create demand is ruled out due to the government's commitment to keep the deficit low. The Reserve Bank of India has cut lending rates to stimulate growth. One view would be to wait and hope for the downturn to end as lower lending rates and increased liquidity begin to have an impact. The other would be to also take some unconventional steps that have no -- or at best marginal -- fiscal implications to stimulate demand

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