During the global financial crisis, a big uncertainty around the world was about how much risk there was in the system, where it lay and who was bearing it. A possible explanation for the government’s timid fiscal response may be the fear of spooking the market. But within weeks of stepping into his shoes, I was called upon to cut rates, and that too sharply, to fight the global financial crisis. One view is that the government should err on the side of taking a fiscal risk without any preset fiscal deficit number. It will be advisable for the government to fix an upper bound for fiscal deficit and operate within that.

Source: Indian Express April 14, 2020 22:17 UTC