curious to know. I remember fiscal strategy was quite different from other countries during covid.
the government focused on infrastructure related expenses rather than direct benefit transfer.
Honestly, government ain't doing a lot but it's people who r hustling n boosting GDP. Govt. is just an enabler.
Fpi+fdi+remittances+dollar sale by RBI is reason behind inr stability.
Due to festival demand we saw a zoom in manufacturing, real estate and mining which resulted in 7.8% q2 growth 📈.
Remove top 5cr tax paying citizens n nation will be like a sub saharan Africa 🌍 nation
Infrastructure boost by government causes cyclical effect in economy. Dbt or ubi ain't a solution in 1500M nation. It's suitable for small EU nations with 5-10M population.
I believe government including states should spend on education, skill development n health as much as possible. Currently we spend 20% on subsidy n less than 2% on education or health. It's happening since 1947.
We need to build capacity n not work less but paid bots.
We should be a knowledge economy not a labour economy.
Peace out ✌️
I feel two things which saved India - 1) Aggressive govt risk taking ability 2) Demographic dividend
Though we see a dangerous level of fiscal deficit (as per historical records), we needed someone at RBI/FinMin to take that risk. One of my professors, Jayant Verma who’s also a member of MPC, made convincing arguments against those risks. But again theoretical risks and real life rewards become two sides of the same coin. The cleansing of banking system (look how likes of PNB, BoB) is one such example.
When countries like Canada, Australia, Germany relaxed their immigration systems to improve the demand. We already had people waiting to consume cheaper loans, services. The demand reached to such levels that the same brand hotel in Goa > Dubai.
Foreign tech companies opened record number of GCCs post covid in India. All because they can find people who can deliver value at much cheaper cost.
Extremely interesting actually.
Specific to covid, here's what happened.
They also realised quickly (within 2Q) this is not sustainable as the multiplier on economic growth for putting cash in peoples hands is 0.9.
This decays growth.
To counter the lag, the food security was taken care of.
They chose to bet the house on the capex and we are where we are as a result.
Weirdly fiscal prudence >>> fiscal exuberance when times of trouble arrive. Else, fiscal exuberance wins hands down when you enter a bull market.
Since it’s hard to time the cycle, erring on the side of prudence is better to hedge downside risk for a country which has a significant chunk of populace close to poverty.
But thats precisely what this government has circumvented. There is no prudence/austerity because the mid/long term opportunity demands you to be bullish.
Fed 800 million people for free. Takes pressure off headlines that force you to engage with multiple small surface area schemes.
Invested the money in creating infrastructure++ and accelerated time to go-live. That way the lag that existed in capex spending impacting the broader economy has shrunk significantly.
Credit where it's due, RBI has done a great job keeping inflation in check also it is trying to keep the rupee stable also we have started tasting the fruits of the groundwork done by the government in the first term. Also kudos to people of India for rejecting the khichdi government in the last election, I hope people elect stable government in 2024 election as well ✌️
However, with all these positives, we need to be cautious. While most economies go from being resource driven to manufacturing driven to service driven, we jumped straight to being service driven. In the mid to short term that's great for the middle and upper class but the whole reason why the manufacturing stage exists is that it is a more sustainable way of uplifting people.
Over 70% of our women are still not part of the workforce and rural unemployment is high. A strong manufacturing base is needed if we are to make use of everyone in the best way.
Thanks to Richard Nixon and Kissinger.
And our sleeping politicians
Manish Tewari, Mudi shud rejine. Debt/GDP in 14 = 52% odd Debt/GDP in 23 = 57% odd Plus new highways, air...
This is known issue but as an developing nation, this needs to improved and worked upon
Inspite of so many "better than earlier govts" reforms in the last 10 years...the govt hasnt done much needed reforms in the income tax regime.
The govt is doing a few good things like dissolving inept psu's, selling off entities like A...
It's my money, i should be able to spend some part of it towards the issue i relate the most to, apart from my own voluntary donations.
Of course the government needs to come up with some framework for proper distribution, but there sh...
