The assumption of 11.5% nominal growth in 2022-23, which served as the basis for Tuesday’s budget math, is best interpreted as a sign of conservative accounting. Many economists expect this figure to go even higher. As far as the Centre’s plan is concerned, it is a good sign. Not just because the overshoot could lead to some fiscal leeway, but more than what has been said about our finance ministry’s clear stance on inflation. Our budget makers would have pegged next year’s actual growth at 8%, with the price level rising by 3.5%. Or maybe some other division with less growth. Either way, it suggests that our central bank will be appointed to fulfill its inflation mandate.
This assumes significance in the context of an age-old policy inducement that secretly drained away the national debt in the face of crisis overload. Inflation relieves debtors and punishes creditors. About adsorption with burden on 90% of total production and interest payment 9.4 trillion next year, why not let the “money illusion” dominate the economy? This is unfair on lenders for starters; And especially on bank depositors, who have been financially oppressed by low easy money rates for a long time.
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