Fiscal Vs Monetary Policy: Which is the better

COVID-19 relief mechanism?

The last one and half years have been tumultuous for the
world at large affecting all spheres of life including the
economy. India has not been immune to the spill over effects
from the global economy too. Coupled with the effects of its
self-imposed strict lockdowns at different points of time, the
unemployment rates have shot up with the GDP growth rates
being in the negative range in any quarter for the first time
since independence.

This naturally sparks a debate, which one among the

conventional tools of economic management is better suited to
tackle the disruptions caused by a pandemic of this
magnitude.

While fiscal policy mainly aims at eliciting a demand stimulus

response by putting more money into people’s hands through
increased Government expenditure, monetary policy induces
the same thing more subtly through the medium of interest
rates, mainly short-term interest rates on government
securities and treasury bonds or call market rates. A decrease
in such interest rates makes it easier for people to borrow
from commercial banks thus increasing consumptions pending
and boosting the growth process.
So, for a crisis of the magnitude of the COVID-19 pandemic,
should the economic policymaking for recovery focus on the
fiscal strategy or the monetary policy strategy, that’s a ver