Budget 2020 India: Abhijit Banerjee said the fiscal deficit has been breached by a huge margin already and in that sense, he does not think that it's a big deal to breach it more.
Union Budget 2020 India: Nobel laureate Abhijit Banerjee has said that cutting education funds due to budget constraints won’t help as that is just a drop in the ocean. He added that the federal government provides very little funding to the education sector as it is a state subject and mostly funded by the state. Abhijit Banerjee said this on the back of centre’s reported plan to cut the school education budget by Rs 3,000 crores in the current fiscal due to funds crunch. Considering the high fiscal deficit numbers till now, the Nobel laureate further added that the fiscal deficit has been breached by a huge margin already and in that sense, he does not think that it’s a big deal to breach it more and thus he would not support fiscal tightening right now.
Earlier this week, Abhijit Banerjee said that exempting some people from income tax is a silly thing to do and it would not spur demand in the economy. In an interview with CNBC TV18, he advised to spend on the country’s infrastructure to create more employment opportunities.
In the same interview, Nobel laureate Esther Duflo had suggested that the estate tax or inheritance tax is politically unfeasible and the government should further focus on collecting wealth tax and increasing taxes on the super-rich. The duo highlighted that the income of the poor has risen but the income of the rich has risen even more, which has squeezed the middle-class.
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Meanwhile, the fiscal deficit of India has already widened to Rs 8.08 lakh crore, which was Rs 7.17 lakh crore in the same period a year ago while the growth rate of net taxes on products has been lowered from 8.8 per cent in FY19 to a mere 5.8 per cent in the current year, according to the first advance estimates of national income, released by the Ministry of Statistics and Programme Implementation.