Fiscal monetary coordination required

20 APR,2020 | MEDC


The world is probably facing its greatest economic challenge since the Great Depression. The constraints imposed by markets, investors and the economy are forcing policymakers to respond with one hand tied behind their backs. Given space restrictions, policy choices will have to be efficient and creative, with fiscal and monetary strategies complementing each other rather than dampening mutual efficacy. All public expenditure will need to be carefully examined and targeted to priority areas like strengthening healthcare infrastructure, the agricultural sector and MSMEs – the biggest employment generators in the economy. Tax rationalization should be based on market realities, and the RBI needs to simultaneously take bolder steps to boost economic growth, especially by further streamlining interest rates. A simple monetization of the deficit will not do.

*Photo Credit: Google

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