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Many medium size packages likely to be announced: Top official
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SME Times News Bureau | 23 Apr, 2020
The government did not want to give one big package unlike other
countries and many medium size packages are likely to be announced and
response will be sooner than anticipated, according to Sanjeev Sanyal,
Principal Economic Adviser, Finance Minister.
In a call hosted by
Elara Capital on Wednesday, Sanyal said the government wants to direct
more resources in the rebuilding phase. A spokesperson from Elara
Capital refrained from commenting on the call.
In the fiscal
response, he indicated that more measures will come. Sanyal said the
government is preparing for the long haul and keeping the powder dry.
"Most other countries have responded in a knee jerk fashion and have
nearly exhausted their ammunition. Govt in India knows that we are in
this for a long haul and hence more pronounced responses will be needed
over next few months as the full scale of economic impact becomes
visible," he added.
He indicated the packages will come "in
reasonable time". "Within reasonable limits the government shall make
allowances for the current fiscal situation. We got to be sure that the
government doesn't spend all our ammunition at one go", he said.
He
emphasized that India has taken a different approach to fight the covid
pandemic and is mindful of the repercussions if the epidemic is not
controlled.
"India is prioritising containment and hence has been
proactive in announcing a stringent and an early lockdown. The
Government believes that if the epidemic is not controlled then the
repercussions will be very difficult to manage. Thanks to this approach,
infection rate in India is much lower given our population," he added.
The
focus is on a step by step by step approach in lifting the lockdown.
Government is taking a calibrated approach, Sanyal said. "From 3rd May
onwards, depending on the feedback, except for a few hotspots a
significant part of the economy can be opened up. The evaluation will be
done on the basis of the incoming data," he indicated.
On the
government's policy approach, Sanyal said, "The government has taken a
view that we need to hedge for the worst and accordingly take a gradual
approach in responding to economic shock. As an immediate measure the
government has made sure that the poorest and the most vulnerable get
fed. Apart from monetary and fiscal response, structural reforms that
improve the efficiency of businesses will be undertaken," he added.
On
the best approach to lift the lockdown, Sanyal said that India has so
far gone for a sectoral approach for gradual opening of the economy.
"Eventually
India needs to take the geographical approach. There is no logic in
keeping Sikkim shut when there are no cases there. In the near term,
inter-state large scale movement of people will have to be controlled.
There will have to be control over travel out of the country. But goods
travel can be opened up completely", he added, flagging a geographical
approach.
He said the government is preparing for the long haul.
"Government's view is that the crisis will last longer than what most
people assume. So the government is preparing for a long haul. There
could be months before we get out of this. So steady and step by step
approach is the key", he said.
Cheap capital is the key, Sanyal
added that the government believes that it is important that the cost of
capital is kept low. Hence there is more room for interest rates to
fall and for transmission to improve. Both corporate and government are
borrowing at high rates. India has more space on the monetary side than
fiscal, the Principal Economic Adviser added.
He believes the
post covid world will be a reset. "The post covid world will see a reset
at different levels: social, economic, geopolitical, supply chain,
technological among others. The Government of India realises this and
hence wants to focus on measures that ensure that we see economic gains
in the long run", he said, elaborating on a complete reset and how to
capitalize on it.
India will attract the supply chain shift.
"India wants to take all measures needed to attract supply chains that
are likely to get reset in the post covid -economic order. Very
important that Indian businesses remain in a risk-taking mode else India
will not be able to take advantage of this global reset of order", he
added.
The government will do everything in its capacity to
ensure that businesses remain healthy especially in the MSME sector. The
lower leverage of Indian businesses is proving to be a blessing in the
current phase, he said.
India will play an important role in the
post Covid world, Sanyal said and the government is already providing a
huge leadership at multiple levels especially at the G-20. "Our response
to health situations has been appreciated widely", he added.
He
emphasized the need to "Think Big. Think Bold". Hinting at coming
reforms, he said. "We need to boldly market our country to the entire
world. We need to be able to re-think our tax laws, labour laws, legal
system."
For instance, it takes over 40 days to deliver a cloth
from Delhi to New York and 18 days of the 40 are taken in India itself.
This is a glaring pain point that needs to be addressed. Industry needs
to think big & demand big; not get tied up with miniscule matters,
he added.
Just as India undertook measures to restrict Chinese
FDI through automatic route, the government will be vigilant to dumping
issues and respond in a timely manner, Sanyal said.
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Customs Exchange Rates |
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