We all want more.yeh dil maange more! But not virus...
But in these difficult times of pandemic, we want our Govts.to loosen their purse strings and become spendthrifts. When Indian govt announced a fiscal relief package of Rs.1.7 lac cr. everybody cries hoarse immly saying this is not enough by throwing comparative figs. of USA, Germany etc.
The people who do this either they do it wilfully to push Govt to spend through its way and land in dooms day after couple of years in terms of galloping inflation ,huge twin deficits, etc. or ignorant of the consequences. The unintended consequences of unbridled spending can be costlier than the problems we face today, in the medium to long term. Human tendency is to postpone the pain and not bite the bullet today. Seldom we understand that when we are postponing our pain, we are also inadvertently postponing our gain.
Secondly, they do not want to put the spending of Rs.1.7 lac cr in the perspective of two economic indices when comparing with advanced economies.One is in PPP terms and another in terms where India's Tax to GDP ratio remains as compared to advanced countries. I will give some interesting comparison base don World bank data on GDP in PPP terms. US is with USD 20.544 trillion approx and India is at USD 10.5 trillion even though at current prices it is at US$2.72 Trillion. link,link.
Next is, What is Tax to GDP ratio in US, which enables a country to spend more in times of need - it is at 24.3% (after Trump's Tax cuts ) and in India it is at 16.8%. Inorder to understand this we should know that OECD countries average Tax to GDP ratio is above 34%; in BRICS countries which are in our league -Brazil at 34.4%; Russia at 19.5%; China at 20.1% and South Africa at 26.9%- are all much ahead of us in terms of Tax compliance. Are we paying our Taxes properly, so that we can ask our Govt. to spend during times like this ? We have umpteen grouses against the Govt. to justify why we are not fully Tax compliant both in letter and spirit.
The above figs. must open your eyes to the fact why India cannot spend its way through the pandemic. However everything is not lost. India has huge forex and food reserves for a rainy day like this, its demography is a huge dividend potential which remains untapped , has IT,Pharma and Tech giants & has innovative Startup culture to be nurtured,and this is the right time for the Govt. to unleash its animal spirits-whether a sleeping elephant or a tiger.
But in these difficult times of pandemic, we want our Govts.to loosen their purse strings and become spendthrifts. When Indian govt announced a fiscal relief package of Rs.1.7 lac cr. everybody cries hoarse immly saying this is not enough by throwing comparative figs. of USA, Germany etc.
The people who do this either they do it wilfully to push Govt to spend through its way and land in dooms day after couple of years in terms of galloping inflation ,huge twin deficits, etc. or ignorant of the consequences. The unintended consequences of unbridled spending can be costlier than the problems we face today, in the medium to long term. Human tendency is to postpone the pain and not bite the bullet today. Seldom we understand that when we are postponing our pain, we are also inadvertently postponing our gain.
Secondly, they do not want to put the spending of Rs.1.7 lac cr in the perspective of two economic indices when comparing with advanced economies.One is in PPP terms and another in terms where India's Tax to GDP ratio remains as compared to advanced countries. I will give some interesting comparison base don World bank data on GDP in PPP terms. US is with USD 20.544 trillion approx and India is at USD 10.5 trillion even though at current prices it is at US$2.72 Trillion. link,link.
Next is, What is Tax to GDP ratio in US, which enables a country to spend more in times of need - it is at 24.3% (after Trump's Tax cuts ) and in India it is at 16.8%. Inorder to understand this we should know that OECD countries average Tax to GDP ratio is above 34%; in BRICS countries which are in our league -Brazil at 34.4%; Russia at 19.5%; China at 20.1% and South Africa at 26.9%- are all much ahead of us in terms of Tax compliance. Are we paying our Taxes properly, so that we can ask our Govt. to spend during times like this ? We have umpteen grouses against the Govt. to justify why we are not fully Tax compliant both in letter and spirit.
The above figs. must open your eyes to the fact why India cannot spend its way through the pandemic. However everything is not lost. India has huge forex and food reserves for a rainy day like this, its demography is a huge dividend potential which remains untapped , has IT,Pharma and Tech giants & has innovative Startup culture to be nurtured,and this is the right time for the Govt. to unleash its animal spirits-whether a sleeping elephant or a tiger.
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