Suppose you have a sudden inflow of money. A bonus at work, a tax refund or an inheritance that gives you a one-time boost. As an individual, you have three decisions in front of you — spend it, pay off your debts, or invest it. Smart people would use a mix of the three options, prioritising the paying off of debt. Governments, too, have the same choices when faced with a sudden money boost. The extra trillion of surplus that the Reserve Bank of India (RBI) has transferred to the government will allow the government, formed after the elections, to decide what path it wants to tread. A fiscal-prudence-plus-investment road is good for the long-term health of the country, a populist spending splurge or redistribution urge will be as harmful as a rich dad buying a Porsche and allowing an underage kid to drink and drive.
