AdvertisingThe counter-cyclical dharma of policy would suggest policy must ease to close output gaps, and monetary policy has started in earnest with 75 bps of rate cuts. Markets are expecting more easing, but the real question is how effective will monetary policy be in the current environment? This is because revenues raised through asset sales are not contractionary likes taxes and duties. All told, aggressive asset sales will allow a growth stimulus (thereby making fiscal policy effectively counter-cyclical) without widening the deficit. The latter will calm bond markets and allow better transmission of monetary policy to further help growth.

Source: Indian Express July 02, 2019 20:24 UTC