Print Friendly, PDF & Email

With limited fiscal space and amidst the uncalled financial distress the onus for economic revival rests with the RBI. Do you agree? Examine.

Topic:  Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

5. With limited fiscal space and amidst the uncalled financial distress, the onus for economic revival rests with the RBI. Do you agree? Examine.(250 words)

Reference: The Hindu

Why this question:

The question is amidst the financial downturn that India is going to face in its near future owing to the distress caused by the corona outbreak.

Key demand of the question:

Explain in what way India’s financial distress was exacerbated by the pandemic. With limited fiscal space, the onus for economic revival rests with the RBI.

Directive:

ExamineWhen asked to ‘Examine’, we must look into the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications.

Structure of the answer:

Introduction:

Briefly explain the context of the question.

Body:

First, present the factors that have caused the financial crisis – The constantly evolving Covid-19 pandemic have cast a long shadow on the global economy, which was already jolted by the US-China trade war.

Comment on the fears of a possible   global recession; massive supply-chain related disruptions across a range of industries from containment efforts in China and other economies; amplification of demand-side shocks due to uncertainties as well as lockdowns and other containment measures domestically; and propagation of financial shocks and the US dollar credit crunch etc.

Discuss the role that RBI needs to play to handle the situation.

Conclusion:

Conclude by suggesting measures to address the issue.