Centre's economic package will provide limited benefits: Former Union Finance Secretary
May 20, 2020
New Delhi [India], May 20 : The economic package announced by the Centre is above Rs 20 lakh crore but the immediate delivery or aid is quite limited and less than 10 per cent while its benefits will also be limited, said former Union Finance Secretary Subhash Chandra Garg.
Speaking to ANI, Garg said, "There are three major aims of this economic package. First that the economic growth should come back on track, second to revive the businesses and third...a large number of people became jobless due to the lockdown. There are over 10 crore people who lost their jobs out of which many of them are migrants who are trying to return home."
"The objective of economic stimulus is to achieve these three goals. Its component should have been more from the fiscal side. More aid should have been provided by the government. The fiscal component is the smallest while the liquidity component is the largest, which is above Rs 10 lakh crore. I don't think it helps a lot to achieve these three objectives," he added.
He added that government support is about Rs one and a half to a quarter to two lakh crore, which is relatively smaller than it should have been.
"The component of the credit will be to see how the banks will give it. The package is above Rs 20 lakh crore but the immediate delivery or aid is quite limited and less than 10 per cent. Its benefits will be limited, it does not appear to achieve the objective in lieu of the damage done," he added.
On being asked about the relaxations given in lockdown 4 while India's tally crosses one lakh-mark, Garg said: "Cases will now increase, previously the area of infection was limited which started from the cities. People are returning to their villages from the cities. I think we should be ready now that the rate of infection will increase."
"But we should not be worried about it if the death toll does not increase. With the opening of the economy, hunger will no longer be a problem for many," he added.
On being asked how he would have prepared the package, Garg said that we must help the migrant workers who have lost jobs due to COVID-19 crisis.
"They should have been provided with a monthly aid of Rs 5,000, Rs 7,000 or Rs 3,000 in cash. It's not difficult to prepare their database. When the database for the railway is being prepared so migrants' database would also have been prepared," he said.
"Secondly, MSMEs need grant. The package of Rs three lakh crore announced for MSMEs, only 45 lakh MSMEs will benefit from that. There are 7.5 crore MSMEs in this country, it was possible to help others by registering. They should have been included in this package," he added.
On being asked if the unemployment rate will increase in future or not, Garg said that mining and construction works have now opened along with a few shops so gradually employment will start increasing.
On being asked if several MSMEs will be shut, Garg asserted that a few of them will definitely close down.
"Survival of a few businesses is difficult like the travel industry or the entertainment industry. But there are many new businesses that can grow. Digital economy will get a boost. The rule of the economy is that when something ends, something new begins. By focusing on digital business, we can compensate for those jobs which will be created due to the closure of other businesses," he added.
