Can the Modi government shed its Nehruvian approach to taxation?

The Budget must focus on the income effect by taking steps to put more money in the pockets of those who are still earning.

As January approaches, two things are happening that are important for the economy. One is the Omicron effect. The other is the Budget effect.

On the face of it the two seem unrelated. But in fact they are intimately related because while one is causing the income effect on demand, the other causes the price effect on it.

The income effect on demand is simply the effect on demand of a change in real incomes. The price effect is the effect on demand of change in prices.

Omicron, unless controlled, will cause the income effect. If incomes get depressed, demand will decline, too.

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