It is Not Deficit Budget But Priorities that Matter

Monday, November 21, 2016

Basic Keynesian analysis suggests that a deficit budget during a slowdown is a good thing.

In the present slowdown in the economy due to external shocks, private sector spending is observed to be falling, and individual saving is on the rise – leading to unused resources.

Government borrowing is a way of utilizing these unused savings and ‘#kickstarting’ the economy.

The #deficit spending, especially on #regional infrastructure, can help promote higher growth, which will enable higher tax revenues and the deficit will fall over time.

If you try to balance the budget in a slowdown, it will worsen the situation.

But, one need to understand that Projects aimed at Population Concentration result in (unfair) #Redistribution and hence will not help create any extra value.

Therefore, it is not the Deficit Budget but #Priorities that #Matter.
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