Stimulus needed for quick revival of economy, says Maruti’s Bhargava

NEW DELHI: India needs a fiscal stimulus to ride out the crisis caused by covid-19, Maruti Suzuki India Ltd chairman RC Bhargava said, as he joined a chorus of business leaders and economists calling for the government to announce a fiscal package to support businesses and create jobs.

Bhargava said that the government should make consumer products more affordable as he hinted at tax cuts on automobiles. He said also that the Suzuki Motor Corp. unit will decide on its future investment plans (capex) after studying the demand for its cars s in the future.

India’s largest car maker is meanwhile witnessing an increasing number of queries online for its vehicles, Bhargava said, underscoring pent up demand for entry level or affordable hatchbacks in the domestic market. “The poor who have no means of living will require direct transfer. More important than just transferring money is also to ensure that there is a demand creation in the economy. My belief is that demand creation is more effectively done by making products affordable rather than by transferring some money to everybody’s pocket since everybody is not a customer and transferring money does not create the type of demand required for industrial revival,” Bhargava said in an interview on Sunday.

He said “countries are already working out big packages to stimulate economic revival and I am sure our country will do something on the same lines.”

Maruti is considered a bellwether for India’s passenger vehicle industry with more than 50% market share. The automobile industry contributes almost 7-8% of India’s gross domestic product (GDP) and provides employment to millions, directly and indirectly.

Maruti and other automakers are meanwhile waiting for a decision on the status of the ongoing 21-day national lockdown.