INDIA NEEDS HUGE FISCAL STIMULUS: KAUSHIK BASU

NEW DELHI: India needs a large fiscal stimulus as the country faces big risk of slowdown in the economic growth due to covid-19, former chief economist of World Bank Kaushik Basu said on Sunday. He also suggested that the government may need monetisation by the Reserve Bank of India. Basu said inequality in India is already very high and coronavirus pandemic will make it rise further. “There are dark clouds over every economy in the world, and India is no exception. We do need a large fiscal stimulus. India has the FRBM Act, 2003, for fiscal management and to make sure that government does not overspend. But the FRBM is a sophisticated piece of legislation that recognises that, during times of natural calamity, we should be allowed to run up larger deficit,” he said. Moody’s Investors Service on Friday said it has estimated India’s GDP growth to hit ‘zero’ in FY21, and pointed to a wide fiscal deficit, high government debt.