Said it day before y'day as well. Mixing Monetary policy measures with fiscal (barely any) & pushing the narrative of 'Stimulus' is an illiterate's tale. Money available for lending through monetary measures (RBI) is not stimulus. If govt bears the int burden it becomes stimulus
One fiscal measure I remember is US govt putting $2500 in accounts of every household. That is putting real money in hands of consumers, who will spend that money thus keeping up the demand & thus businesses churning & needing money for investment../2
Giving tax relief makes no sense to loss making businesses as anyway they are not obligated to pay taxes. Similarly giving credit to loss making beleaguered companies makes ZERO sense when there has been a demand destruction. Why would they borrow?../3
Only thing that makes sense is helping companies keep the payroll, so that demand comes back. So dear Eng/Hist/Psycho/Botany (H) Economists, lot of money available for lending brings no change, only cheap money makes sense..Govt must bear the interest burden.. rest is ..well../4
Let me repeat, household & corp balancesheets have meager numbers on liquidity (asset side). If @narendramodi ji was serious on revival & ensuring tht damage is minimized, providing direct cash support now & not promises of support at some uncertain time in future is only ans /5
The cash infusion, including “special liquidity scheme" that will purchase NBFC debt, the expansion of the rural unemployment guarantee scheme, and direct cash transfers via Jan Dhan and Mudra accounts, etc., amount to just about 0.8-1% of GDP.. /6
Very intelligent @nsitharaman ji & @FinMinIndia baboons either don't know or assume that others don't understand anything. Destroyed the economy thru unscientific lockdown extensions, Obsession with containing Fiscal deficit is astounding../7
Even with the potential rev shortfall and cash relief measures (including those that might be announced later) all this will not add add up to more than 2% of GDP. Which is in line with earlier announcement that the GOI will borrow an additional 2% of GDP this year../8
Unbelievable it is. Wat @narendramodi ji repeatedly calls unprecented, greatest human tragedy & what not, pushes him to raise the deficit merely by 1% of GDP (other 1% may accrue due to rev shortfall of his own making). If size of govt's response is measure,y close the economy..9
