Christina Romer, the head of Obama’s Council of Economic Advisers, defended the government’s stimulus plan by arguing that countries without substantial stimulus had done less well than those with a stimulus plan. She included India–along with France and Italy–on the list of countries that were doing less well. I’m confused. Isn’t India expected to grow by 6-7% this year (and isn’t the US’s GDP expected to shrink)?
Also, I wonder how she calculates the size of India’s stimulus. Although it’s true that the pure fiscal stimulus provided by the government is relatively small (around $4 billion last year), the country is also spending a fortune on the National Rural Employment Guarantee Act (NREGA), which, as many economists have argued, functions as a de facto stimulus, boosting income and consumption in rural areas.
