Finance Minister Nirmala Sitharaman on Monday said the government has begun an exercise to assess the impact of the pandemic on the economy and likely contraction in GDP, even as she did not rule out the possibility of another stimulus to boost growth. “I have not closed the option for another stimulus … Every time we have announced one, it has been after a lot of consideration… I have not closed the option to come up with one more stimulus," she said at the launch of a book — Portraits of Power: Half a Century of Being at Ringside – by the 15th Finance Commission Chairman N K Singh.
To a question on whether the Finance Ministry would come out with an assessment of economic contraction, Sitharaman said the ministry has started doing some assessment since the beginning of October and would soon come with a projection. “We have only now started doing some kind of an assessment. We waited for the commencement of the second half, which has just started. And we have got a lot of inputs which are very different from what we had in July. And ideally, it should be so.
“Perhaps yes sometime we will have to come out with a statement. Whether I do it in public or do it in Parliament is one thing, but the Finance Ministry will have to make an assessment of what it is going to be," she said. The Reserve Bank of India has projected the Indian economy to contract 9.5 per cent in the current fiscal, while the International Monetary Fund (IMF) and World Bank estimates the contraction at 10.3 per cent and 9.6 per cent, respectively.
Last week, Sitharaman had announced a payment of cash in lieu of LTC and Rs 10,000 festival advance to the government employees to stimulate consumer demand during the festive season and boost the economy. She also announced additional capital spending and Rs 12,000 crore, 50-year interest-free loan to states to boost the economy that has been battered by the pandemic and the resulting lockdown.
These two measures are “expected to create a consumer demand of about Rs 28,000 crore. The government, which had in May announced a Rs 20 lakh crore ‘Aatmanirbhar Bharat’ stimulus, is pushing ahead with a full opening to try to boost the economy ahead of the usually high-spending festival season.
A tough lockdown imposed to stem the spread of coronavirus had resulted in the economy contracting by a record 23.9 per cent during April-June. Sitharaman further said the ministry would soon approach the Cabinet on demarcating the strategic and non-strategic sectors.
In May, the minister had announced that a new coherent Public Sector Enterprises Policy would be formulated to push reforms in central public sector enterprises (CPSEs). There will be a maximum of four public sector companies in strategic sectors, and state-owned firms in other segments will eventually be privatised. “Work is going on and I would like to see a realisation on that.. (it) is likely to come to the Cabinet," Sitharaman said. Speaking at the event, Reliance Industries Chairman Mukesh Ambani said India needs to rethink and reinvent manufacturing.
“… We need as much thinking about bricks as we have about clicks. We need to think in terms of an entire ecosystem that delivers the future industries and future services," Ambani said.