India Can’t Afford to Go on a Debt Binge
With a spendthrift new budget, Narendra Modi is undermining his greatest strength as an economic manager.
Modi had been known for fiscal restraint.
Photographer: T. Narayan/BloombergIndia’s economy has suffered more than most from the pandemic and so have its people. The country has lost more than a year’s worth of growth and perhaps a decade’s progress in its efforts to reduce poverty. The economic contraction — the first in India since the 1970s — has put pressure on its government like so many others to respond.
Until this week, that response had been relatively restrained. Prime Minister Narendra Modi’s government seemed to recognize that there was only so much it could do to address the economic contraction, especially while the pandemic is still raging. By its actions, the government implied that any welfare-promoting and growth-enhancing measures had to stand on a solid macro-economic foundation.