However, even if we consider that BJP does so there are still some chances that the trickle-down effect will play its role. The trickle-down effect is an economic term that means giving tax concessions to rich classes which will eventually lead to more profit for them and hence will fire fewer employees from the firm, this is an ideal situation which not always work but still, there are some chances it would do something than nothing. Let’s talk about Revdi culture, how would it be beneficial to the other people of India when taxpayers’ money is used to give gold to married girls? Or giving television to the people? What worth would it give to the economy if the government is pledging to give free laptops to college students? These are just some examples you will find multiple bogus freebies. What they do is nothing but add up more expenses to the government and as a result, increase the fiscal deficits.
Image from RBI publications.Ironically, the PM criticized the opposition while failing to explain it to its party. No single party is responsible to do promote the Revdi culture and it is badly impacting the Indian economy. PM may fail to cancel Revdi culture from its party but an economist with a clear understanding of macroeconomics is not rejecting PM’s remark, Revdi culture is dangerous and must be stopped.As mentioned above freebies are increasing the fiscal deficits of the government. So what are fiscal deficits and how are impacting India? A fiscal deficit is a difference between the total income and the total expenditure done by the government. India’s current fiscal deficit stood at 9.9% and in economic terms, it is a very bad term. The ideal fiscal deficit should be not more than 3%, so the actual is even more than three times of ideal one.And high fiscal deficit means the government is earning less and spending more than necessary. Therefore high fiscal deficit means fresh borrowings/demand for loans by the government.This is at a time when India is performing extremely well in other economic spheres. GDP growth is one of the highest in emerging markets, inflation situation is much more in control.What is your take on freebies? Do you think we need to cancel this culture?
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