The Rs 21 lakh crore package through a combined monetary and fiscal policy package was not `stimulus’ but temporary relief measures and not helping revive the economy. “Relief has not been adequate” said Rathin Roy, the director of the think tank National Institute of Public Finance and Policy, underscoring the need for medium term measures. ” The government should clearly communicate how it is going to spend over the next three years”. The level of fiscal deficit was not important at this juncture, but what is more important is revival of demand in the economy.
The economy is expected to contract at double digit levels in FY’21 following a nation-wide lockdown prompted by the spread in COVID-19 pandemic. The government has not released the growth in the industrial production numbers for May and the June retail inflation at 6.09 per cent is way above the Reserve Bank’s comfort levels.
Pronob Sen, Programme Director for the International Growth Centre (IGC)-India Programme and former chief statistician felt that the government’s move to transfer cash in jan-dhan accounts was a good idea, but the amounts should have been much more. He called for a need to identify projects in which one could ramp up expenditure immediately in sectors such as irrigation, rural housing. Besides, he also called for the need of major upgradation of the health sector, a more of medium term measure.
“We need a medium-term strategy to create a virtuous cycle” Ananth Narayan, associate professor, finance, SP Jain Institute of Management and Research (SPJIMR). “(We need) stimulus that will help a firm’s bottom line and measure essential to preserve financial sector stability” He underscored the need for real sector reforms that would help generate much needed jobs to revive the economy.
The economists were speaking at a seminar organized by academic institution SPJIMR in Mumbai.
Anantha Nageswaran, a part-time member of the Economic Advisory Council to the Prime Minister, called for the need to undertake measures that would provide a signal to the public on the ease of doing business and ease of living. Doing away with income tax assessment or capping various cesses were such examples, he noted.