COVID-19 Pandemic: Relevance of Austerity Measures Revisited

Abstract

Austerity measures in public finance have become the new normal in the last decade since the global economic crisis of 2008 which has gained momentum in the COVID-19 pandemic era. Focusing to enact fiscal discipline and to stabilize the turbulent economy, governments worldwide including India have resorted to massive austerity measures like significant reductions in the public expenditure, introducing regressive tax rates, and labour market reforms including reforms in the pension. Notwithstanding, increased border tension with the neighbors have further contributed to the Indian economy. Thus, the tool of the austerity has come into limelight due to drastic fall in the government exchequer and unprecedented shoot up in the public health expenditure following the COVID-19 pandemic has posed a plethora of challenges for the public sector as well. With demands being raised for further sustainable cuts in the government expenditure, the delivery of a balanced budget likely to require implementation of strategies primarily focused on the deficit reduction. Accordingly, the current research has focused on the effective public sector funds management in line with the effective austerity policies to cope up the COVID-19 pandemic. Moreover, it has attempted to unearth the multiple facets of public finance in general with an emphasis on the austerity measures in particular.

Full text

COVID-19 Pandemic: Relevance of Austerity
Measures Revisited
Abstract
Austerity measures in public finance have become the new normal in the last decade since the
global economic crisis of 2008 which has gained momentum in the COVID-19 pandemic era.
Focusing to enact fiscal discipline and to stabilize the turbulent economy, governments
worldwide including India have resorted to massive austerity measures like significant
reductions in the public expenditure, introducing regressive tax rates, and labour market reforms
including reforms in the pension. Notwithstanding, increased border tension with the neighbors
have further contributed to the Indian economy. Thus, the tool of the austerity has come into
limelight due to drastic fall in the government exchequer and unprecedented shoot up in the
public health expenditure following the COVID-19 pandemic has posed a plethora of challenges
for the public sector as well. With demands being raised for further sustainable cuts in the
government expenditure, the delivery of a balanced budget likely to require implementation of
strategies primarily focused on the deficit reduction. Accordingly, the current research has
focused on the effective public sector funds management in line with the effective austerity
policies to cope up the COVID-19 pandemic. Moreover, it has attempted to unearth the multiple
facets of public finance in general with an emphasis on the austerity measures in particular.
Keywords: Austerity, COVID-19, government spending and revenue.
JEL: I18, I38
Authors:

1Mr. Sourav Chakraborty, Ph. D. Research Scholar, Department of Commerce,
Tripura University, Suryamaninagar, Tripura-799022, Mobile No- 9774445711,
Email-
s.borty25@gmail.com
2Dr. Rajat Deb, Assistant Professor, Department of Commerce, Tripura University,
Suryamaninagar, Tripura-799022, Mobile No- 9774426965,
Email- debrajat3@gmail.com