Fiscal stimulus and investment

Extraordinary times call for extraordinary measures! This can mean a large deficit or the use of re-allocative and redistributive fiscal policies on a larger scale. Or, we can have a mix

You cannot solve the problem until you call it by the right name —Mikhail Gorbachev

On November 12, the Government of India (GOI) announced a new package to revive the economy. This includes a fiscal stimulus. It emphasises production and employment. However, it does not pay adequate attention to what is, in the broader perspective, arguably the basic and somewhat persistent issue of low investment and low growth. But at this stage, is it possible or even desirable to address this issue? It is.

It will help to label fiscal policy here under three different heads: Keynesian fiscal policy, re-allocative