STOCK MARKET BSE NSE

Mixed stimulus bag to rev up India’s stuttering economy  

That said, one must point out that much of the Rs 2.65 lakh crore package announced on Thursday is for the long haul and could have little impact on India’s economy in the present.

Published: 14th November 2020 07:47 AM  |   Last Updated: 14th November 2020 07:47 AM   |  A+A-

Recession, Economy, Loss

Any investment in demand creation now would certainly help speed up the process. (Express Illustration)

The Union finance minister’s announcement of stimulus package 3.0 is a timely step. Any moves to create demand and boost the economy that received a body blow during the early months of the pandemic should certainly be welcomed by all quarters. With green shoots of a recovery visible with high-frequency indicators showing an uptick, the RBI has forecast that after two quarters of negative growth, India should be able to post a positive GDP growth in the current October-December quarter.

Any investment in demand creation now would certainly help speed up the process. That said, one must point out that much of the Rs 2.65 lakh crore package announced on Thursday is for the long haul and could have little impact on India’s economy in the present.

The largest chunk, comprising a Rs 1.46 lakh crore Production Linked Incentive scheme for select sectors such as automobiles, textiles, pharma and electronics, is to be spread over five years and in many cases will result in a spur in investments in the years ahead, but not now.

Similarly, the equity infusions in the National Investment and Infrastructure Fund and Exim Bank will help boost infrastructure and project spending in the future with no likelihood of yielding immediate benefits. The scheme to extend credit guarantees to 26 stressed sectors, named ECLGS 2.0, though it would not immediately create any demand, will help keep afloat a number of firms and their large workforce through difficult times, and is welcome.

Incentives to create new jobs by way of subsidies to take care of provident fund contributions are similarly laudable as they would release extra spending power in the hands of workers. Of far more importance is the extra money promised for the National Rural Employment Guarantee Scheme and for building industrial infrastructure and domestic defence equipment.

These would create jobs and certainly spread cheer in the economy by way of circular spending. This would help push demand for goods and services, which is what is needed to bring India’s industry back to 
full capacity and rev up its stuttering engines of growth.
 



Comments

Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the newindianexpress.com editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on newindianexpress.com are those of the comment writers alone. They do not represent the views or opinions of newindianexpress.com or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. newindianexpress.com reserves the right to take any or all comments down at any time.

edexworks
flipboard facebook twitter whatsapp