Fresh fiscal stimulus not needed, must spend committed amount: Jalan
NEW DELHI: Reserve Bank former Governor Bimal Jalan on Sunday opined against a fresh fiscal stimulus to boost pandemic-hit economy saying it is more important to spend the amount already committed by the government than to increase the deficit.
“I think the fiscal stimulus is already there… What you need is to spend the total amount of expenditure that you have already announced and implement what has been announced so far.
That is much more important than increasing the fiscal deficit target again,” Jalan said. In May, the Centre had announced a Rs 20 lakh crore ‘’Aatmanirbhar Bharat’’ stimulus to help the nation tide over the economic crisis induced by coronavirus. “... if you have finished the total amounts of resources that you have already announced, then you should increase the fiscal deficit,” he added.
So far, the Centre has announced three rounds of stimulus measures.
Recently, Economic Affairs Secretary Tarun Bajaj had said Finance Minister Nirmala Sitharaman will soon announce the next set of stimulus packages to boost the coronavirus-hit economy.
To a question on India’s current macroeconomic situation, Jalan said the COVID-19 pandemic had an adverse effect on economic activity, but now the Indian economy is on a revival mode.
“The expectation is that by 2021, this loss in jobs and the loss in growth would have been made up by the end of 2021,” the RBI former governor noted.
“And the rate of growth 202122 may be 6-7 per cent,” he said adding “but we will have to wait and see that the COVID-19 issue does not recur again” he said.