Developed countries can ignore macro-economic reality but India can't

Hard work on inflation means there is monetary space in this crisis; but years of mismanagement means there is no fiscal firepower

Topics
Global economy | Indian Economy | 2008 financial crisis

Mihir S Sharma 

Mihir S Sharma

It should go without saying that 2020 is not 2008. The crisis through which the global economy is currently passing is not a financial crunch, but a public health crisis with an effect on the real economy.

The sole similarity between the two moments from the point of view of the economy is the risk of a market freeze-up — caused in 2008 by a breakdown in finance, and in 2020 by temporary demand destruction — leading to long-term scarring, and the insolvency of otherwise going concerns. Then, as now, policymakers would respond to such a threat by flushing the system with ...

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First Published: Sun, October 25 2020. 22:44 IST
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