Finance minister Nirmala Sitharaman said on Monday that the government, which has started a mid-year review of the economy, is open to offering another stimulus package and her policies are focused on shedding “socialist baggage” by encouraging greater private sector participation in the economy and instituting robust federal government structures.
Sitharaman was participating in a virtual panel discussion on the launch of 15th Finance Commission chairman NK Singh’s book, Portraits of Power: Half a Century of Being at Ringside. Singapore senior minister and coordinating minister for social policies Tharman Shanmugaratnam, and Reliance Industries Ltd (RIL) chairman Mukesh Ambani were the other panellists at the event.
Responding to a question whether another dose of stimulus is expected, Sitharaman said: “I’ve not closed the option to come up with another stimulus.”
The government has already announced two packages as it attempts to revive an economy battered by the Covid-19 pandemic. Between March 26 and May 17, the National Democratic Alliance government unveiled Rs.20.97 lakh crore of stimulus-cum-relief measures. A demand stimulus package consisting of Rs 73,000 crore in public expenditure was announced on October 12. The economy shrank by a record 23.9% in the three months ended June.
The finance minister said stimulus packages are announced after wide consultations with different stakeholders and government arms. HT on October 14 reported that the government was considering a third economic stimulus package, combining fiscal and policy measures that could include incentives for the manufacturing and services sectors, income support for the jobless and incentives to people to spend instead of keeping their money in the bank.
On India’s gross domestic product (GDP) growth forecasts by various agencies, Sitharaman said the finance ministry had already started a mid-year assessment of the economy based on the latest inputs.
“ … we got lot of inputs which are very different from what we had in July. Perhaps, yes…, sometime we will have to come up with a statement, whether I do it in public or whether I do it in Parliament is one thing…” she said.
The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) has predicted that India could see its worst recession ever this financial year with the economy contracting by 9.5%. The International Monetary Fund’s (IMF) World Economic Outlook (WEO) report recently forecast a 10.3% contraction in India’s GDP this fiscal year.
Mentioning key big-ticket reforms, she said that to realise the policy of Atmanirbhar Bharat Initiative (Self-Reliant India Initiative), there should definitively be a clear-cut mention of how the Indian economy has to shift away from undesirable socialistic baggage the country has been carrying all the while.
“Second, I would think that federalism has got to be really more robust,” she said emphasising a continuous, real- time effort in this direction to make the country strong.
She cited Prime Minister Narendra Modi’s vision that the country would progress rapidly if all the states grow at a similar speed. The third point, the finance minister emphasised was the need for the education system to catch up with the contemporary needs of the young. She said skill development and learning should be interwoven.
Ambani spoke about three contributions to society — transforming India towards a digital society, transforming the education system with the focus on skills, and transformation of energy from fossil fuel to renewables.
“At any point in time we have 200 million children in India in the education system and it will take us 8-10 years to completely transform the skill base of India,” he said.