Three contradictions that hobble Modi govt's response to economic slowdown

The Modi regime wants a bigger role for the government but it does not have the comfort of having enough financial resources

Three broad contradictory trends have marked the government’s management of the Indian economy in recent months. The contradictions have made the policy challenge to overcome the current economic slowdown even more formidable. How soon the Modi government can resolve these contradictions is difficult to say, but their early recognition at least will perhaps be the first step towards a resolution.

The first contradiction stems from the Centre’s stressed finances. The headline number for the government’s fiscal deficit does not tell the entire story. Yes, the fiscal deficit in 2018-19 was 3.4 per cent of the gross domestic product (GDP) and