As the advocacy for modern monetary theory grows louder around the world, Niranjan Rajadhyaksha discusses whether it is viable in a country like India.
"However, countries such as India do face a financial constraint. It is called the balance of payments. India needs foreigners to buy domestic assets to get the dollars it needs to fund its current account deficit. It is a financing constraint, and one that is not unrelated to government budgetary policy."
"The situation in India is far more complex. The labour market is informal. Employment is often seasonal. There is a persistent problem of disguised unemployment. Labour force participation is low, especially for women. The structural challenge is to create jobs outside agriculture. It is doubtful that these issues can be dealt with through the management of aggregate demand alone."
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