Indicate the Problems Which Are Created for the Government's Finances as a Result of It Seeking to Avoid an Even Deeper Recession. What Solutions Might You Recommend?

QUESTION : Indicate the problems which are created for the government's finances as a result of it seeking to avoid an even deeper recession. What solutions might you recommend?

RECESSION: it is significant decline in activity across the economy, lasting longer than a few months. It effects industrial production, employment, whole-sale retail trade and real income. Recession most of the time remains for two consecutive quarters.

Global economic recession effects almost all economies world over, and the global economic recession effects India as well, due to which many major sectors of Indian economy are effected which leads to a multi-crore loss in business and export orders, thousands of jobs are lost. IT, automobile industry, and export oriented firms are the most effected once.

Government announces stimulus package so that the economic growth pops up. The finances for this package are raised by the government. Due to these packages and other financial help given by the government they face financial problems:

Alternative system requires much more intervention and more stringent rules. In real world these rules are automatically introduced more and more opportunities for corruption and mistakes might mean another systems even it is better in principles it would be worse in practices.

Indian economy has been hurt by the global financial recession, but India may be in better position with quick recovery and for future growth than many of the other economics as Indian banks did not have significant exposure to Sub-prime loans in the U.S. RBI’s decisions to appropriate use of a range of instruments such as CRR, Repo/Reverse Repo rate, SLR MSS and LAF are in the right direction and taken in time.

There is currently a high level of activity amongst the business support community with a key focus on ensuring businesses survive the downturn. A challenging and critical focus on the basics, or fundamentals of businesses, is likely to give local companies the...