Abstract
The global financial crisis and the “Great Recession“ of 2007-9 catalyzed a remarkable consensus across all major countries for remedial action in the form of strongly expansionary fiscal and monetary policies. However, by 2010, in industrial countries, the consensus in favor of strong fiscal stimulus had been rent by growing calls for fiscal prudence and austerity. In India, where fiscal austerity has been notable by its absence over the last thirty years, the narrative runs somewhat differently. Fiscal deficits have generally been high, though they have not engendered high growth. Indeed the two periods of fastest growth, 1992-97 and 2003-08, were both associated with significant fiscal consolidation. And the resurgence of high deficits after 2008 has contributed to the recent slowdown in investment and growth. Hence, the ongoing industrial nation debates on austerity versus stimulus may have little practical relevance for India’s current fiscal priorities.
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Notes
- 1.
- 2.
For a detailed account of fiscal and macroeconomic policies and developments during this period, see Acharya (2010).
- 3.
See Acharya (2012a, b) for accounts of India’s policies and outcomes during after the global crisis.
References
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Acharya, S. (2014). India and Fiscal Austerity. In: Callaghan, M., Ghate, C., Pickford, S., Rathinam, F. (eds) Global Cooperation Among G20 Countries. Springer, New Delhi. https://doi.org/10.1007/978-81-322-1659-9_23
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DOI: https://doi.org/10.1007/978-81-322-1659-9_23
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