Skip to main content

Targeted Economic Policies - India



The COVID-19 pandemic is expected to cause severe impact on the economy than the 2007-2008 recession. Certain steps, maybe in the form of policies have to be taken by the Government. Extending the deadline the financial year for 2019-2020 might also be a good idea as it will act as a cushion for the companies. Several countries have already taken this decision.



For the rest of this article I will explain the remaining possible targeted policies with India as an example.

India extended its Financial Year 2019-2020 deadline from April 31, 2020, to June 30,2020. But extending the deadline alone will not create a major change. Certain more steps have to be taken. Since, already India has been fighting with stagflation for nearly a year it will be very difficult for the Government to take any policies without further investigation.



Stimulus packages were announced by the Indian government amounting to nearly rupees 20 lakh crores, but unfortunately it failed to meet the demand side obligations, as most of the stimulus packages provided were on the supply side. Of course, this must be the first step taken as supply must be increased but the next stimulus package focussing demand side must have been given after two or three months but there is still no sign of such a stimulus package.

Since, the country already was undergoing stagflation for more than a year before the start of the Coronavirus pandemic, the Government planned to increase the Supply and provide certain subsidies for the companies, so that more people will not lose their jobs.

Increasing interest rate must be done in order to attract more FDIs (Foreign Direct Investments), but unfortunately since the consumption component of Aggregate demand is very low, increasing interest rate will not be a good option in the short run.

Repo rate (the rate at which the commercial banks get money from the central bank), the cash reserve ratio and the statutory liquid ratio has to be reduced,so that the banks will be able to lend more money out.

Both Statutory Liquid ratio (SLR) and Marginal Standing Facility (MSF), has to be decreased so that Banks will be required to keep only small amount of Government securities as reserves, and the rest can be lend out to the public.

These are some of the Targeted economic policies that can be adopted by Countries around the world.

Labels:

Comments

Post a Comment

Popular posts from this blog

Korean War | change in position of the 38th parallel

Korean War history and the 38th parallel North Korea is an isolated nation that proclaims its southern neighbor South Korea as its enemy. North Korea blew up its joint liaison office with South Korea on 16 June 2020, in a dramatic and carefully planned display of rancor toward its southern neighbor. Till the end of the Second World War, there was no separate North and South Korea and they were collectively called Korea. In this article, we will see what led to the separation of Korea and the Korean War, which was fought after the separation in detail. Korean war led to the split of North and South Korea Separation of Korea At the end of the Second World War, Korea — which had formerly been occupied by the Japanese — was divided along the 38th Parallel (38 degrees North) by the United States (US) military planners Dean Rusk and Charles Bonesteel, as a temporary division of the country. But the onset of the Cold War (rivalry that developed after World War II between the US and the So...
16 comments
Read more

Maximum time difference on Earth - 26 hours

maximum time difference Earth's largest time difference: Time Zone may be used to refer to the local time of a country or a region. Time zones in the world are obtained from the UTC. If each time zone were 1 hour apart, there would be 24 time zones in the world. The clocks throughout the World are not adjusted for Daylight savings as all are under the regulation of a Coordinated Universal Time (UTC).  UTC is 0 hours which means any area on the Earth can only be ahead (+) or behind (-) the UTC. We know that there are 24 hours in a day, so we may think that the biggest time difference between two points on the earth would only be 24 hours. But, according to the standard time (UTC) which we follow, the biggest time difference is 26 hours. The reason behind this is because of the man-made imaginary International Date Line (IDL) which was agreed in 1884 at the International Meridian Conference (IMC). The IDL serves as the "line of demarcation" between two consecutive calendar ...
4 comments
Read more

Penguins contribute to Climate Change

Penguins contribute to climate change The Earth’s average temperature has been keeping on increasing at a rapid pace over the past few decades. A major problem that contributes to the increase in global temperature is the presence of greenhouse gases in the atmosphere. When the Sun’s energy reaches the Earth’s atmosphere, some of it is reflected into space and the rest is absorbed and re-radiated by the greenhouse gases. The absorbed energy warms the atmosphere and therefore the surface of the world. This process maintains the Earth’s temperature at around 33 degrees Celsius warmer than it might rather be, allowing life on Earth to exist. Climate forcing is the change in the balance between radiation coming into the atmosphere and radiation going out. A positive radiative forcing tends on the average to warm the surface of the world, and negative forcing tends on the average to chill the surface. Likely, human activities such as burning fossil fuels, agriculture, and land clearing are ...
4 comments
Read more