Monday, January 27, 2020

Borrowing is still a taboo word. Budget needs to rethink

Another Union Budget is near and air is rife with speculation as to what is expected. Against the backdrop of a weak economy, the government has its work cut out.

The first task would be to accept that this is not a run-of-the-mill slowdown and cannot be remedied by ordinary methods. The GDP is expected to grow at 5 per cent in FY20, and for the calendar year 2019, it is possible that India’s growth rate will be the lowest in the last decade. In addition, investment growth is expected to be about 1 per cent, which bodes ill for coming years as well.

Of the many suggestions made in recent weeks, most have encouraged a cautious approach. An approach that seems tentative, even fearful. This approach derives its core not from the experiences of the past, but from the fears that have prevented India from participating in global and regional development episodes for decades.

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This note was published on on January 23, 2020

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