Budgeting in a time of crisis -TCA Ramanujam
Keynesian economics offers guidelines for preparing the Budget
The Great Depression wrecked the economies of the U.S. and Europe. In the words of Jonathan Alter, when Franklin Roosevelt became the American President in 1933, he was told: “Mr. President, if your programme succeeds you would be the greatest President in American history. If it fails, you will be the worst one”. Roosevelt replied: “If it fails, I will be the last one”.
Today the U.S. is facing its worst economic crisis since the Great Depression. Like Roosevelt, President Joe Biden is launching the American Rescue Plan to revive the economy. His $1.9 trillion plan proposes $1,400 per-person payments, increased unemployment benefits, assistance to local governments, support for accelerated vaccine rollout, investments to get children back in school, and a minimum wage of $15 an hour.
In India, Finance Minister Nirmala Sitharaman will present the Union Budget on February 1, 2021. The pandemic has severely affected growth. The government was quick to announce a package of 20 lakh crore. Fiscal deficit could overshoot the target set by the Fiscal Responsibility and Budget Management Act. Spending more is going to be difficult. According to the Centre for Monitoring Indian Economy, unemployment, both rural and urban, is surging, and health and infrastructure budgets are getting stretched. How much can the government afford to spend and in what direction? Can Keynesian economics offer guidelines?
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The Hindu, 26 January, 2021, https://www.thehindu.com/opinion/op-ed/budgeting-in-a-time-of-crisis/article33661833.ece?homepage=true