India Must Spend, But Can’t Ignore Taper Tantrum
The emerging-markets tailspin unleashed by the Fed in 2013 should figure into this year’s budget.
India’s great pandemic migration last spring. Millions still need income support.
Photographer: Anindito Mukherjee/BloombergIndia’s federal budget Monday will be a much tougher balancing act than New Delhi’s regular annual fiscal trapeze. For one thing, the pandemic has upset business-as-usual calculations of how much to spend, on what, and how to finance it. For another, an impatience to make up for lost time has to be weighed against a shrinking of policy space in emerging markets: A reprise of the 2013 global taper tantrum could compound the country’s considerable domestic challenges.
On the first question — how much to spend — Finance Minister Nirmala Sitharaman must simply do a lot more. Even with some loosening of the purse strings in the final months of the fiscal year that will end in March, Moody’s Investors Service affiliate ICRA Ltd. expects annual government expenditure to have been broadly unchanged from the 30 trillion rupees ($415 billion) estimated before the outbreak.