The government is open to adopting new measures in an effort to boost the economy which has been hit by the second wave of COVID-19, says Chief Economic Advisor KV Subramanian. He said the demand for a fresh stimulus package has to be considered against the backdrop of a host of initiatives taken by Finance Minister Nirmala Sitharaman in her budget for 2021-22.
“Like last year, we do remain very open to coming up with more measures as well, but I think it is really important to take into account the big differences between last year and this year when we talk about stimulus,” Subramanian said. “Unlike the previous budget which was framed before the pandemic, the 2021 budget was presented amid the pandemic and had already incorporated significant fiscal expansion.”
The CEA explained that the focus is particularly on infrastructure spending which leads to construction activity and subsequently creation of jobs in the informal sector and demand generation. The significant capital spending by the government led to a 15% increase in the construction sector in the fourth quarter and the gross fixed capital information to GDP surged to 34%, the highest in the last six years.
Emphasizing that the final objective is to ensure that the economic recovery gathers, Subramanian said the government will do whatever is necessary to ensure that. With regard to food security for the poor, he said the government has already extended the free food programme for 80 crore population till November.
Subramanian, in regards to the free vaccination programme, described it as an important economic measure. “Vaccine as you would appreciate is by far the most important from the perspective to get back into the path of economic recovery.”
The Economic Survey 2020-21 released in January this year had projected GDP growth of 11% during the current financial year ending March 2022. India’s economy contracted by less than expected 7.3% in the fiscal year ended in March 2021 after growth rate picked up in the fourth quarter, just before the world’s worst outbreak of COVID-19 infections hit the country.