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This is such a poor attempt of defending the govt econ policy by @TheJaggi . I avoid calling out anyone, but we are in a pandemic and fiscal/inflation hawks need to be called out. (assuming he is one since he is making their arguments) https://swarajyamag.com/economy/modi-package-critics-have-a-simple-goal-get-him-to-repeat-upa-mistakes-spike-recovery-court-defeat">https://swarajyamag.com/economy/m...
First, cash support or any other form of support during Covid is not a dole or subsidy. Jaggi’s main argument is that if govt spends now, it will cause a downturn during the election time like it happened in 2010-13. He lists all the subsidies, stimulus and econ policies of UPA
Why is that a bad take? Because conditions are entirely different from 2008. Then we had a booming economy going into a crisis while this time we have been struggling with the slowdown for the last two years.
Multiple sectors like Power, Real Estate, Financial, Telecom etc have been struggling for a long time. Add the covid stress to that and you get fresh troubles in sectors like travel, tourism, entertainment, construction too.
Consumption is also struggling. Basically, we are facing a massive demand destruction due to mass layoff across the sectors. In a time like this, you cannot tread with caution. We should be worried by massive liquidation and debt deflation than some inflation spike in 2023/24.
He also quotes Ruchir Sharma and Rajan on fiscal constraint which is somewhat true but even they agree that there is a limited fiscal space which we must utilize it to protect the economy and enable the recovery. We can certainly do better than 1% of GDP
Another point of his is about the effectiveness of stimulus in a lockdown. Nothing prevents the govt from announcing some relief measures now and structure the rest of the stimulus for when the economy reopens. Time is the essence, wait and watch strategy is not going to work out
TLDR: spend the money
