4 min read.Updated: 09 Sep 2019, 11:01 PM ISTAjit Ranade
Thankfully, India is enjoying a demographic dividend that gives it greater leeway for deficit-financing
The dominant consensus on the slowdown in India is that we have a demand problem. Lack of aggregate demand is a phrase that goes back to John Maynard Keynes. He is a ghost who reappears from time to time, however much one tries to bury him. Regardless of whether you are a Keynes devotee or not, his logic is irresistible, both to the policymaker and the common man, or woman. If there is insufficient demand on account of inadequate consumption, investment or exports, it ought to be offset by the government stepping in. That is to say a fiscal push is inevitable. Only once the government creates demand for goods and services through extra deficit-spending will new jobs and incomes be generated, which in turn will create fresh demand for goods and services, setting off a virtuous cycle until the economy can run on its own steam without fiscal steroids.