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Business News/ Home-page / Faith and stimulus
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Faith and stimulus

Faith and stimulus

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What joins the dots between India’s IT honchos in cities and the large crowd of humble farmers spread across the country? They show the limits of the idea of consumption fuelling a slowing economy and contradictions inherent in the idea of stimulus packages.

In the last two days, big IT companies such as TCS and Infosys have announed that the variable part of their employees’ pay may face the axe, given their dwindling growth.

The government, on the other hand, is busy cutting indirect taxes to make a large number of goods cheaper and more attractive to consumers. In addition, it hopes that farm loan waivers may also fuel spending.

In both instances, its faith may be misplaced. Employees are likely to hoard their cash, fearing bad times ahead. The farm loan waiver is at best a stimulus that occurred a while ago. Falling agricultural growth means farmers may have little disposable income to boost consumption.

So, is it time to think about other “options" to revive economic growth?

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Published: 28 Feb 2009, 12:28 AM IST
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