False

$show=search/label/May%202022

 


Debt Brake Rule UPSC NOTE

 What is the debt brake rule?

  • The debt brake rule, or the balanced budget rule, sets a cap on how much governments can borrow to finance various public projects. 

  • It restricts the federal government in Berlin from running a fiscal deficit in excess of 0.35% of GDP and in effect prohibits the country’s 16 regions from any deficit spending whatsoever. 

  • The measure was enshrined into law in 2009 by the grand coalition government through an amendment to the German constitution

  • The budget brake is more or less the domestic version of the stringent borrowing and spending curbs built into the EU’s SGP and the 2012 Fiscal Compact Treaty.

Legal Challenge 

  • The plaintiffs to the dispute, the opposition CDU and CSU, contended that investments in climate change and energy transition were part of the long-term financing activities of the state. 

  • These could not be funded from the emergency exemption provided in the debt brake, which was related specifically to COVID-19 relief. 

  • The government countered that the diverted money addressed the economic consequences of the pandemic, insofar as the investment shortfall could be linked to the economic impact from COVID-19.

How has Germany fared after 2009?

  • Through successive years in the last decade, Germany’s export driven economy registered impressive rates of growth and ran budget surpluses, backed by high levels of employment compared to other states in the single currency union. 

  • Businesses borrowed cheap, thanks to the European Central Bank (ECB)’s ultra-low interest rate policies

  • The government slashed net borrowing to achieve a zero-deficit budget — a scenario Berlin sold as a simple case of practising what it professed, an ideal recipe for a single currency

union reeling from a sovereign debt crisis.

  • Criticism that the biggest economy in the EU’single currency area ought to adoptexpansionary fiscal measures to cushion several countries that were reeling under a severe recession went almost unnoticed.

  • Come 2019, a cooling economy during a global downturn turned the spotlight on the cost of under-investment in infrastructure, viewed as critical to restore Germany’s competitiveness.

  • Commentators and business lobbies questioned the reticence to take advantage of the ECB’s ultra-low rates of interest and expansive bond buying programme.

 

  • while others pointed to higher taxation as a preferred route out of stagnant investment.

  • Angela Merkel, then Chancellor, argued that Germany, with the world’s largest number of elderly population, could not burden its shrinking young population with additional debt.

  • In 2020, the debt brake rule was suspended to raise record levels of borrowing to fund various pandemic measures and was on course to be reinstated this year. 


COMMENTS

Name

Amritsar,1,Art & Culture,1,August 2023,251,Courses,7,Daily Current Affairs,48,December 2023,189,Disaster Management,2,Environment and Ecology,54,February 2024,188,Foundation Course,1,GDP,1,GEMS Club,1,GEMS Plus,1,Geography,67,Govt Schemes,2,GST,1,History,2,Home,3,IAS Booklist,1,Important News,71,Indian Economy,46,Indian History,2,Indian Polity,56,International Organisation,12,International Relations,58,Invasive Plant,1,January 2024,240,July 2023,281,June 2022,6,June 2023,268,May 2022,17,Mentorship,2,November 2023,169,October 2023,203,Places in News,2,Science & Technology,66,September 2023,205,UPSC CSE,111,
ltr
item
Learnerz IAS | Concept oriented UPSC Classes in Malayalam: Debt Brake Rule UPSC NOTE
Debt Brake Rule UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
https://www.learnerz.in/2023/12/debt-brake-rule-upsc-note.html
https://www.learnerz.in/
https://www.learnerz.in/
https://www.learnerz.in/2023/12/debt-brake-rule-upsc-note.html
true
4761292069385420868
UTF-8
Loaded All Posts Not found any posts VIEW ALL Readmore Reply Cancel reply Delete By Home PAGES POSTS View All RECOMMENDED FOR YOU LABEL ARCHIVE SEARCH ALL POSTS Not found any post match with your request Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS PREMIUM CONTENT IS LOCKED STEP 1: Share to a social network STEP 2: Click the link on your social network Copy All Code Select All Code All codes were copied to your clipboard Can not copy the codes / texts, please press [CTRL]+[C] (or CMD+C with Mac) to copy Table of Content