Context: The World Economic Outlook report by the international Monetary Fund (IMF) highlights that our fiscal relief resembles that of advanced rather than emerging economies in its low emphasis on discretionary spending.
Impact of COVID-19 on Indian Economy:
Issues with Indian fiscal response: India Fiscal Response has been paradoxical and is not in consonance with its emerging market peers.
Reasons for India’s cautious approach
Conclusion: A rise in precautionary savings across the country will lead to higher demand for safe assets such as government bonds, at least till there is a sustained rise in the private sector.