Fiscal realities: Why govt cannot respond to Covid-19 crisis more fully

The problem is on both revenue and expenditure sides - the former is shrinking in relation to GDP, and the latter is rising despite a sharp drop in petroleum-related subsidy bills - writes T N Ninan

Whenever the finance minister presents to Parliament a fresh set of Budget numbers for the current financial year, the immediate impact of Covid-19 on the fiscal situation will become known — and inevitably become the focus of the discussion that follows. The fiscal stress caused by Covid-19 is unavoidable; indeed, many would argue that the government should have opened its purse strings a little more. While that is as it may be, what should concern us (and which may get lost in the focus on Covid-19) is the fiscal regression of recent years as the economy slowed. It is this