Question

We had several fiscal stimulus packages during the Bush and Obama Administrations to try to expand the economy. We borrowed and spent Trillions of dollars and got a relatively small increase in the GDP. However, now real incomes are up and unemployment is down.

Some would argue the money was well spent and it just took longer than expected but the economy is now on track and we did the right thing.

Some would argue that all the borrowed money has pushed us much deeper in debt and the economy would have recovered without any help from the government. The whole thing was a waste and dangerously flawed public policy.

Is the government managing our economy, or mismanaging it? Take a side and discuss in detail, giving examples to support the position.

Answer 1

The government announced stimulus packages are basically for emergency situations. where the economy forcefully slowdown. Now it is the duty of the government to give support and run the economy with such kinds of packages. Now to support the fiscal stimulus packages I would like to take the current situation that is COVID-19 in whole over the world. Our example country is India. As we know India is the second-largest populated country.till ow more than 0.7 million affected by COVID 19, and due to this pandemic all most all the sectors got affected. Now, it is the duty of the government to support its citizens in terms of basic necessities as they lose their jobs and the affected people in terms of health care services. The government of India has announced 20 trillion as a stimulus package. so now we are going to analysis that what basically the government divided these packages.

First of all, this package is a combination of relief and development projects. All other developed countries have declared packages in between 10-12%of GDP, In the of developing countries, it will vary from 2% to5%. So this package is not the final one, maybe in future government needs to declare more packages. so in this case specifically government packages should not consider for the return or benefit as this is the crisis situation and for the country, its citizens come first. NHere government directly sending money to beneficiaries like BPL people's accounts, providing health care facilities and free rations. so it is the responsibility of the governmental care of its citizens.

the focus is on the health care sector. providing 130 crores of population health care facilities with medical and paramedical staff and types of equipment is one of the biggest challenges for the country. so a big portion of this package goes to that part.

Another important factor is to support the small scale and medium scale industry. As the economy is a slowdown and these sectors are struggling to survive so the government will help them to sanction loans and it may be possible to get back the investment that may take more time than the normal one. cutting benchmark rate, interest rate moratorium, and infusing huge money into the market through the banking system also a part of this fiscal stimulus package. each and every sector got affected by this COVID-19 so its government duty to help every sector accordingly.

The government also had taken some measures like reducing DA, cutting salaries of MPs and other expenditures which can be manageable. Now governmetn may need more monetary and fiscal changes and pacakges to fight with this type of pandamic so in this case thinking about government debt and priofit issue may justifible.