NITI’s Kumar bats for fiscal stimulus: 

NITI’s Kumar bats for fiscal stimulus

Context

  • NITI Aayog Vice Chairman Rajiv Kumar has pitched for fiscal stimulus to boost growth, with a rider that additional expenditure should be used only for increasing productivity and capital expenditure.

About NITI AAYOG

  • The National Institution for Transforming India, also called NITI Aayog, was formed via a resolution of the Union Cabinet on January 1, 2015 by replacing erstwhile planning commission.
  • NITI Aayog is the premier policy ‘Think Tank’ of the Government of India, providing both directional and policy inputs.
  • While designing strategic and long term policies and programmes for the Government of India, NITI Aayog also provides relevant technical advice to the Centre and States.
  • At the core of NITI Aayog’s creation are two hubs – Team India Hub and the Knowledge and Innovation Hub. The Team India Hub leads the engagement of states with the Central government, while the Knowledge and Innovation Hub builds NITI’s think-tank capabilities. These hubs reflect the two key tasks of the Aayog.

What is fiscal stimulus and it’s effects?,

  • A ‘stimulus’ is an attempt by policymakers to kickstart a sluggish economy through a package of measures. A fiscal stimulus entails the Government spending more from its own coffers or slashing tax rates(in short an expansionary fiscal policy) to put more money in the hands of consumers.
  • It will increase liquidity in the market and hence, increases the purchasing power, boosts consumption and leads to inflation

About Economic advisory council

  • Economic Advisory Council to the Prime Minister (PMEAC) is a non-constitutional, non-permanent and independent body constituted to provide a sounding board for inculcating awareness in Government on the different point of view on key economic issues.

Function of EAC

  1. Analyzing any issue, economic or otherwise, referred to it by the Prime Minister and advising him thereon;
  2. Addressing issues of macroeconomic importance and presenting views thereon to the Prime Minister. This could be either be suo-moto or on a reference from the Prime Minister or anyone else;
  3. Submitting periodic reports to the Prime Minister on macroeconomic developments and issues with implications for economic policy;
  4. Attending to any other task as may be desired by the Prime Minister from time to time.

What is fiscal consolidation,

  • Fiscal consolidation is a process where government’s fiscal health is getting improved and is indicated by reduced fiscal deficit. Improved tax revenue realization and better aligned expenditure are the components of fiscal consolidation as the fiscal deficit reaches at a manageable level.
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