What should the extent of this fiscal stimulus be? Concerns have already been expressed that a stimulus in India should be approached with caution as it has implications for the fiscal deficit. So, with a fiscal stimulus amounting to 10% of GDP, we would be no more than compensating for the economic shock that accompanied the lockdown. What are we to make of the estimated figure of 14% of GDP for the fiscal deficit implied by a stimulus package of 10% of GDP? Some economists look askance at the proposal for a fiscal stimulus on grounds of macro-economic stability.

Source: Hindustan Times April 15, 2020 13:38 UTC