Focus on where money is going: Nirmala
NEWDELHI: Terming the economic package as “reasonably exhaustive”, which will put money in the hands of both individuals and businesses, primarily through loans, finance minister Nirmala Sitharaman said on Sunday that the focus should be on where the money was going and emphasised that the government’s measures will have a “multiplier effect”.
In a wide-ranging interview with Hindustan Times, soon after announcing the fifth tranche of the economic package, the finance minister spoke about the rationale behind the government’s measures, its impact on the fiscal deficit, the absence of data on migrant workers, and rebutted the criticism that the package did not do enough to create demand and address the immediate economic crisis.
When asked about the fact that the package appeared to rely more on monetary and liquidity measures, with limited fiscal outlay, the finance minister said: “At this time, I would request
› At this time, I would request everyone to focus on where the money is going. I think it is important to reach out to those sections (of the population) that need relief to even survive... If additional money doesn’t reach small units, they can’t pay wages; they can’t buy raw material... NIRMALA SITHARAMAN, finance minister
everyone to focus on where the money is going. I think it is important to reach out to those sections (of the population) that need relief to even survive. And not just individuals. If additional money doesn’t reach small units, they can’t pay wages; they can’t buy raw material; and run their units to even 10-15% capacity. So I’m making sure that is where the money goes; wait for the multiplier effect it can create in its immediate ecosystem.”
The finance minister, however, refrained from giving a specific answer on the implications of the package — as well as the current economic situation due to the coronavirus disease (Covid-19) outbreak and the lockdown — on the budget numbers. Asked if there was any modelling of revenue estimates, she responded: “In this Covid era, does any modelling help?”
When asked if a possible downgrade by credit rating agencies held the response back in terms of the stimulus, the finance minister said that while they discussed agencies, given India’s strong indicators — and
the fact that it was not unique in facing the pandemic — there was no reason for the agencies to “treat India badly”.
Saying that she was “amazed” by the comparisons with other countries, which had the advantage of better systems and data, the finance minister said that reforms brought in by the Narendra Modi government such as the direct benefits transfer scheme helped the government provide direct aid to different segments. But she added: “But do I have other data? Did anyone, before this crisis, have data on migrant workers? Has there been any political party or analyst or economist or public thinkers – did anyone know the size of the migrant labour population?” Underlining that she was “thankful” that the issue of migrant workers was being discussed in depth, as it should, the finance minister added: “Whoever though that it would take a pandemic like this to tell us that even migrant workers need to be registered?”
Countering the criticism that the government’s moves will do little to spur demand, the finance minister said that when term loans and working capital loans are given to units, they will use it to pay wages or buy raw material. “That is spurring demand. So demand doesn’t just get spurred at the individual level – people getting money and going out and buying bread and milk and other things. It is also companies, however small, getting that extra loan, so that they can open up after the lockdown. Spurring demand can also happen at the institutional level.”