International Journal of Social Science & Economic Research
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Title:
EFFICACIOUSNESS OF COUNTERCYCLICAL FISCAL POLICY IN INDIA FOR ECONOMIC RECOVERY IN 2021

Authors:
Ananya Shree Mundara

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Ananya Shree Mundara
Pathways World School Gurgaon

MLA 8
Mundara, Ananya Shree. "EFFICACIOUSNESS OF COUNTERCYCLICAL FISCAL POLICY IN INDIA FOR ECONOMIC RECOVERY IN 2021." Int. j. of Social Science and Economic Research, vol. 8, no. 4, Apr. 2023, pp. 843-866, doi.org/10.46609/IJSSER.2023.v08i04.020. Accessed Apr. 2023.
APA 6
Mundara, A. (2023, April). EFFICACIOUSNESS OF COUNTERCYCLICAL FISCAL POLICY IN INDIA FOR ECONOMIC RECOVERY IN 2021. Int. j. of Social Science and Economic Research, 8(4), 843-866. Retrieved from https://doi.org/10.46609/IJSSER.2023.v08i04.020
Chicago
Mundara, Ananya Shree. "EFFICACIOUSNESS OF COUNTERCYCLICAL FISCAL POLICY IN INDIA FOR ECONOMIC RECOVERY IN 2021." Int. j. of Social Science and Economic Research 8, no. 4 (April 2023), 843-866. Accessed April, 2023. https://doi.org/10.46609/IJSSER.2023.v08i04.020.

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ABSTRACT:
Keeping the Indian economic climate in perspective, with receding contribution of private consumption and investment towards the GDP, the Government needs to institute discretionary expansionary fiscal policy in order to inculcate consumer and business confidence and stimulate the economy stuck in a recessionary gap. It is recommended that the Government uses counter cyclical fiscal policy to combat the current economic challenges posed by the business cycle. Nonetheless, a sign-restrictions based structural vector autoregression model unravels that deficit-financed tax cuts are a significantly more reliable and robust tool for the Government to stimulate economic activity than public spending. It is noted that the effects of public spending are rather ambitious. Hence, it is urged that the Indian Government should consider focusing more on developing an effective plan of deficit-financed tax cuts. However, owing to the tendency of taxes to become entrenched and irreversible, the Government must exercise caution in executing the tax cuts via the counter-cyclical policy.

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