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Submitted by Shanta on

Gareth: The implications on inflation would be marginal because we are talking about replacing one form of public expenditures (schooling, health, subsidies) with another (cash transfers). So the fiscal deficit is unaffected. There might be some effect on the current account (and hence on the exchange rate) because of the tradable/nontradable composition of government expenditure v. private expenditure, but this effect is likely to be second-order. Shanta