Bikky Khosla | 27 Oct, 2020
The Union Finance
Minister last week said that the Central government has not closed the option
of coming out with another round of stimulus. Days after the statement, a top
finance ministry official reiterated the possibility of such a move, although
without elaborating on its size, timing or other details. The economy is
presently facing high level of debt and fiscal constraints, but according to
some economy watchers, the Centre can – in fact, it should -- loosen its purse
The government, in May, came up with
the much talked-about Rs 20 lakh crore 'Aatmanirbhar Bharat' economic package.
This was followed by a number of measures in October 12 to induce government
employees to spend in the upcoming festive season. Also, an additional Rs.
37,000 crore fund was announced to push capital expenditure and infrastructure
development. But these decisions so far have received – besides appreciation--
also flak as many are of the opinion that the measures are inadequate.
Meanwhile, the NITI Aayog viewed that
the next round of stimulus package should focus on infrastructure. This, according
to the Vice Chairman of the think-tank, will have multiplier effect and can
sustain growth. There is no doubt that infrastructure development is a must to
revive growth. The Centre has set a
target of achieving Rs 100 lakh crore investment in infrastructure by 2024-25,
but several signs indicate that slowdown in government spending on
infrastructure is going to be massive this year.
do we really need another round of stimulus! Despite the measures taken recently, both business and consumer confidence are still shaky, and we need to
break the cycle of this weak consumer-business sentiment. The recent moves on
LTC and bonus seem to be insufficient to create demand, which may worsen
further after the festival season ends. Also, though the fiscal situation is
constrained now, it is not the right time to worry about deficit as fiscal expansion is needed in times of downturn.
invite your opinions.