Key Points
The post-pandemic fiscal stimulus has had a minimal impact on inflation in India compared to many other major economies, a cross-country study by the Reserve Bank of India economists indicated...
The RBI study investigates the impact of pandemic-induced fiscal expansions on inflation in select advanced economies and emerging market economies controlling for supply-side factors..
The empirical analysis suggests a statistically significant and positive relationship between fiscal expansion and inflation for countries with higher than median fiscal gap during the post-COVID period according to Nishant Singh and Binod B Bhoi from the Department of Economic and Policy Research..
The government and the Reserve Bank of India introduced a judicious mix of fiscal and monetary policies and announced a special economic and comprehensive package equivalent to 10 per cent of Indias GDP to mitigate the negative impact of the pandemic..
Across economies, the extent of direct fiscal stimulus and liquidity support varied with the size of total combined stimulus being higher in advanced economies than that of emerging market economies.While the UK and Japan provided stimulus amounting to over 15 percent of their respective GDP...
