In a move that breaks convention, both the Government of India and the RBI have adopted expansionary stances—simultaneously. It’s rare, risky, and reveals much about the state of our economy.

🔻 What’s Happening?

Monetary Policy: The RBI has cut the repo rate twice recently (25 bps, then 50 bps), aiming to boost lending and revive growth.

Fiscal Policy: The Union Budget brought in income tax concessions—a bid to increase disposable income and stimulate demand.

🧩 The Unusual Combination

Normally, when one policy loosens (say, fiscal), the other tightens (monetary), to prevent overheating. But both are now pushing liquidity into the system—a textbook definition of expansionary policy.

💡 Why this Dual Push?

Because one wasn’t enough. Despite tax breaks, indicators like:

📉 Credit growth at a 3-year low

📈 Unemployment rising from 4% to 5.6%

🧾 Muted consumer spending

suggested fiscal moves alone couldn’t kickstart the economy.

So, the RBI stepped in.

⚠️ But Here’s the Catch

Short-term: This might spur demand and investment.

Long-term: It risks runaway inflation and widening fiscal deficits.

Too much cheap credit + too little government revenue = a potential macroeconomic imbalance.

📌 Key Takeaway

India is at a unique policy crossroads. Coordinated stimulus is needed, but without proper checks, this could backfire.

The question is no longer "Should we stimulate the economy?"

It’s "How long can we afford to, without tipping over?"

Let’s discuss:

💬 Do you think this dual expansionary stance is sustainable?

📈 Or should RBI or the Government begin to moderate?

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