We all have heard about Keynesian economics. If you have not let me state that this is macroeconomic theory where British economist John Maynard Keynes during great economic depression of 1930 suggested that government expenditure on infrastructure & lower taxes to stimulate demand and pull the global economy out of the depression. And when the new investment of the private sector goes down the government chips in with investment in infrastructure to boost employment & increase aggregate demand in the economy.
And in 2020 with lab engineered global pandemic the Federal Reseve has been printing money, doling out cheap loans, keep propping up the markets, hand out free money, keep credit scores high & keep people buying, at all cost. The unlimited QE money printing has led to stock & housing bubble across asset class. Most of the QE goes to the upper one percent.And the direct transfer of COVID-19 stimulus cheques of $2000 to American people with the main aim to boost consumer spending will actually result in hyperinflation. And thats the reason the lives of 99% mass remain unimpacted.
Unlimited money printing has caused income inequality due to zero interest rates and the newly created money finds it way in the inflated stocks. And due to influx of new liquidity, the continuance of dollar as reserve currency will be impacted in the time to come as the countries will prefer honest monetary system which protects the value of the dollar. And this has led to increase in cost push inflation and not demand inflation which happens in Keynesian economics. The forced lockdown imposed globally has caused economic destruction due to supply side disruptions.
Instead of doling out subsidies to the citizens of America the govt should go for massive public infrastructure utilities program like airports, hospitals, roads, bridges, communication systems, affordable housing, revitalize the rural areas, revitalize businesses, recycling materials, building smart cities. And United States did it 1930 following Keynesian economics and Chinese have been doing since last three decades.
In India the Prime Minister under Narendra Modi is following the Keynesian model by unveiling Rs 102 lakh crore of infrastructure projects that will be implemented in the next five years as part of the government’s spending push in the infrastructure sector. And recently the Prime Minister launched launched Pradhan Mantri Kisan Samman Nidhi Yojna (PM-KISAN) scheme, a financing facility of Rs 1 lakh crore under the Agricultural Infrastructure Fund .
To address the issue of affordable housing, Pradhan Mantri Awas Yojana (PMAY) is an initiative by Government of India in which affordable housing will be provided to the urban poor with a target of building 20 million affordable houses by 31 March 2022. The government has also launched Affordable Rental Housing Scheme under which the existing government-funded vacant houses will be used to impact 3 Lakh beneficiaries initially.
The Union Government launched UDAN which is is a regional airport development scheme aimed at enhancing connectivity to remote and regional areas of the country and making air travel affordable. To improve medicare facilities the Narendra Modi govt had set up 157 new medical colleges & created six additional AIIMS in the country. The Central Govt expedited the work of providing roads under Pradhan Mantri Gram Sadak Yojana (PMGSY) in rural areas thereby bringing transformational change in the life of many in the states of Meghalaya, Manipur & Orissa. Highway construction & expansion in the country has touched 30 Kms per day and around 39,350 Kms roads were built and expanded during Narendra Modi first tenure.
The infrastructure at the border got major push in the Modi regime. The Border roads organization has built many bridges, tunnels which include landmark Atal Rohtang tunnel. In October 2020 Rajnath Singh dedicated 44 key strategic bridges to the nation in border areas of Ladakh, Arunachal Pradesh, Sikkim, Himachal Pradesh, Uttarakhand, Punjab and Jammu and Kashmir. The Indian Government is also working towards Universal Internet access by 2022 for all the citizens in the country by improving online infrastructure & internet connectivity through the “Digital India” program.
To address the issue of recycling waste the Union Govt has built 1 lakh km of road built using plastic waste and aims to double it in coming years. And in the push towards alternative clean energy India has started exploring Lithium deposits and found deposits in Karnataka to focus on evolving technologies. The Union Government is now focussing to complete 100 smart cities projects in the country and has initiated grading system for cities to excel.
All the factors above state that government is pushing towards generating jobs in the economy by inviting foreign direct investment in mobile manufacturing by projecting India to be global hub. MNC companies Apple, Samsung and others have invested in India and this would generate 2 Lakhs new opportunities in the economy. The surge in GST collections for three quarters suggest that economy is back on track. And the Indian economy is reaping the benefits of infrastructure push by Modi government which has boosted the consumer demand in the economy. And that what United States has to do the Keynesian model of 1930 rather than policies designed to benefit wall street capitalist.
