Chief Economic Adviser KV Subramanian said when the economy is doing well, the employment numbers should be higher but that is not the case because there is a problem in methodology and employment numbers. In an exclusive interview to CNN-News18, Subramanian said demand for work this year is low while speaking the impact of the coronavirus pandemic on the economy. Reforms to revive economy are transformative and impactful, he said.
“If you recall at the end of the first quarter last year after the GDP had come at a 24.55% decline. I had mentioned that there would be a recovery in the second quarter," the CEA said.
When asked about sector-specific economic stimulus, Subramanian said this year’s Budget was itself was a significantly expansionary one and especially counter-cyclical in terms of fiscal response. “For instance, a 9.5% fiscal deficit number for the year that went by, and a 6.5% deficit for this year. And, that spending is being focussed especially on infrastructure, thereby fostering construction activity. As I had said earlier, these sectors had registered a decline of only 2.3% in March after having had almost double-digit decline in the previous quarters. I am bringing this up because construction activity in the fourth quarter grew at 15%… This is the key point that we have to remember. The philosophy of the budget was widely supported across the board. That philosophy continues to remain and it is only two months where there have been restrictions. So a lot of activity, especially infrastructure activity spending will start manifesting this month and the coming month which will also foster construction activity, thereby helping these sectors. All that said, we continue to be receptive to feedback and assessments on the ground-level situations and will respond. The impact of the fiscally expansionary budget will be felt as we felt in the fourth quarter last time," he said.
The important distinction between the two waves of COVID-19 is that the restrictions now are more localised, he said, adding, “If you look at infrastructure production in April, despite lockdown it has grown to 56% as compared to last year."
On Tuesday, the CEA said the Centre should begin thinking about announcing another round of Covid stimulus, once covid-induced lockdowns and restrictions across states are eased. He said the vaccination programme is important for the trade, transport, hotel sectors to pick up. “Temporary help may be useful and is being thought about travel, hotels sectors," he added.
Speaking further on measures, Subramanian had said, “Construction activity picked up by 15 per cent and it creates a lot of jobs. Rural poor have been impacted and MGNREGA program has been active." Noting that it is important to keep tracking demand for work via MGNREGA to assess rural distress, he said many measures taken by the government have impacted. “When investment picks up, consumption will pick up with some lag."
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