question_answer

While advanced economies (AEs) are increasingly opting for fiscal activism, India should not go for such a move. Which of following are reasons for continuing with fiscal prudence:

1. Indian growth rates are substantially higher, while inflation rates are also substantially greater.

2. India's own recent experience highlights the risks associated with increasing growth rates through fiscal activism. The two episodes of Indian macro vulnerability in the last 35 years - 1991 and 2013 - were associated with large increases in fiscal deficits.

Identify the correct statements:

Codes:

A) 1 only                          

B) 2 only

C) Both 1 & 2       

D) None of the above