The fiscal response challenge

It is still difficult to gauge the actual magnitude of economic destruction being caused by the spread of Covid-19. Panic in the global crude oil market is the latest example of the ongoing economic chaos. Forecasts by the International Monetary Fund (IMF) show that the global economy will contract by 3 per cent during the current year. While the US economy is estimated to shrink by 5.9 per cent, the IMF expects India to grow by 1.9 per cent. In terms of policy response, governments and central banks are intervening aggressively in the advanced economies. The US Federal Reserve’s balance