India can avert the risks of printing too much extra money to spend on a rescue package for the economy. We could slash budgeted expenses and sell covid bonds in markets here and abroad The country is in acute need of money for a hefty fiscal package to fight off covid-19 and its fallout on the economy.
On available estimates, the bill for an effective rescue plan would be in the range of ₹10 trillion. It is a figure that seems to make some policymakers balk, especially since fiscal compression is usually good for economic growth.
These are unusual times, however, and the crisis of stalled or slackened activity that we face this year was what deficit finance—in essence—was intended for all along.