Suspecting deflationary pressure in the economy due to Covid-19, Government has
planned to bring fiscal measures in the country. Give your opinion regarding fiscal
measures which Government has planned to increase aggregate demand.
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Explanation:
Ruling out any impact of stimulus on the price situation, Chief Economic Advisor K V Subramanian on Thursday said the COVID-19 pandemic has severely dented the demand for non-essential or discretionary goods, creating deflationary conditions. He also said that a good part of the Rs 20 lakh crore stimulus package is designed in a manner that the fiscal deficit remains under control.
"COVID has a significant deflationary impact because demand especially for non-essential or discretionary goods and services will go down significantly. Therefore, it is unlikely that there would be too much inflationary impact through fiscal deficit or stimulus package," Subramanian told in an interview.
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