The budget’s stimulus measures must be aimed well for a revival
The budget should be as much about measures to ease supply-side obstacles to growth as about a Keynesian stimulus per se
The general consensus in all the pre-budget advice to the finance minister is that the fiscal caution of 2020 must yield to a flamboyant opening of the fiscal gates. We are closing the current fiscal year with a 7.7 % real drop in gross domestic product (GDP), by the official advance estimate for 2020-21. Recall the eight successive quarters of declining GDP growth before covid, so this has to be as much about using fiscal and non-fiscal measures to release supply-side obstacles to growth as about a Keynesian stimulus per se.