Finance minister Nirmala Sitharaman has defended the government’s stimulus measures announced over five days last week, saying she remains open to more measures as and when needed as the impact of the coronavirus pandemic and the consequent lockdown unfolds.
“I am not ruling it out [more measures in the future]. I have to see how it [the pandemic] develops as we go further,” she told
Mint in an interview.
The measures announced by the finance minister included free food grains for the poor, support packages for small business and a host of sectors, easy loans for struggling business besides a slew of reforms aimed at creating a Atmanirbhar Bharat, or self-reliant India.
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Prime Minister Narendra Modi
announced a Rs 20 lakh crore stimulus package and the finance minister announced the allocation of the funding to various sectors over a series of five press conferences last week.
However, analysts have pointed out that instead of the overall package being 10 percent of the gross domestic product, as touted by the government, it amounts to less than 2 percent of the GDP.
Sitharaman said that decisions were made by various government departments and took cognisance of the best way to spend the public money. “First of all, I am not going to question or dispute or argue various assessments which are coming. I have not hid anything from the public, I have said this is how I have done my work, how it’s being spread, this is the liquidity. I have laid it before everybody,” she told
The Indian Express.
She added: “Now if you want me to tell you the outlay from the Budget, let me tell you this is Government of India, Ministry of Finance, dealing with public money. I will have to stand up in Parliament and say, sometime — and I will do it — but at this stage what is it that you want? Is the money going to the place to where it should actually go, is it going on time, look at all that. Now if the question is tell me the fiscal deficit or could you spend only this much from your entire Budget? You are at liberty to do that. I am not criticising, questioning, objecting to anyone doing their assessments, please go about it.”
She told the
Economic Times that the government's restrained fiscal policy was informed by history. “Mostly I would say, coming from the learning based on the experiences of 2008-13 — that’s one of the reasons why we have taken this course,” she said.
In the wake of the 2008 financial crisis, the then United Progressive Alliance (UPA) government led by the Congress had announced a substantial stimulus package, but it eventually led to a spike in inflation, balance of payments crisis and currency depreciation.
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The pandemic and the consequent lockdown in the country, which began on March 25 for an initial 21-day but remains in effect until May 31 after three extensions, has brought economic activity in the country to a juddering halt.
There have been relaxations in the last two phases of the lockdown with expectations of the economy slowing grinding into gear. Further, the lockdown has created a humanitarian crisis with migrant labourers spread across the country struggling to reach their homes in the face of lost livelihoods.
However, the government has refrained from direct cash transfers to aid their situation.
Sitharaman contends that the decision was deliberate as the government doesn’t believe in “doles”, rather preferring the entitlement route.
“I don’t want to speak for the Prime Minister but whether as chief minister of Gujarat or as the Prime Minister, his faith was on empowering people. Entitlement does not empower. When you give dole, before and after that, your position is no different. He has never believed in entitlements,” she told
“That does not mean he does not recognise (the need for giving benefits). For instance, under MGNREGA, we have given more money because those who return to their villages and face uncertainty, should still have an opportunity. Ideally it will be better if a work opportunity arises either in his own place or elsewhere. It is a sound philosophy because ultimately the dignity of a human is more when he thinks he is contributing, earning honest money and taking care of his family.”
Analysts have also suggested measures like deficit monetisation (greater money supply from the central bank). However, Sitharaman demurred on the suggestion, saying she would rather talk about the measures the government has adopted than the ones it has not.
“No, at this stage, I can’t say anything. I have said in seven hours over four days [while announcing Atmanirbhar Bharat package] everything that I had to elaborate on," she told “So if I have put this [package] forward, there are ever so many that I have left out. Do I answer for what I have put out or do I answer for ever so many that I have not taken on board, however worthy they are. Those which were not taken on board, are not worthy of consideration, they are worthy. But I have come up with this.”