Only a tenth of the government’s rescue measures for individuals and businesses was direct support, Rajiv Bajaj said
Bajaj’s comments are significant as they come amid a broad sentiment in the industry that the stimulus measures should have been more direct rather than relying on bank credit
NEW DELHI :
Bajaj Auto Ltd managing director Rajiv Bajaj on Thursday termed India’s two-month lockdown a “draconian" measure that decimated its economy, adding only a tenth of the government’s rescue measures for individuals and businesses was direct support.
Bajaj said the harsh yet porous stay-at-home curbs “flattened the wrong curve" of GDP instead of coronavirus infections. The industrialist’s comments were part of a conversation with former Congress president Rahul Gandhi, which was streamed online.
Bajaj’s comments are significant as they come amid a broad sentiment in the industry that the stimulus measures should have been more direct rather than relying on bank credit. The business community is now pinning its hopes on a recovery in consumption amid massive job losses and fears of a sharp contraction in the economy this fiscal.
“The way India has been locked down is a draconian lockdown. This kind of lockdown, I’m not hearing about from anywhere else," Bajaj said, adding that the “social and emotional aspects" of the lockdown have been better in other parts of the world. “You have definitely decimated the economy. You flattened the wrong curve. It is not the infection curve; it is the GDP curve. This is what we have ended with, the worst of both worlds. In my view, what should have been done is something more right of centre," he added.
The Narendra Modi administration, which returned to office a year ago with a crushing victory, had to first grapple with an economic slowdown before the coronavirus pandemic gripped the nation, leading to the national lockdown and closure of all economic activities, barring essential ones, for two months.
This has crippled the finances of central and state governments, limiting their ability to offer a big stimulus that the industry has been seeking. The Modi administration has focused on the rural economy, which supports demand in many sectors of the economy.
Gandhi reiterated his view that the lockdown was a failed one. “It is the only lockdown in the world where the disease is increasing after we are opening up. What you are finding is that you are going back to that anyway. The central government has backed off and has said that now, we are going to be forced to leave it to the states," Gandhi told Bajaj.
For over a month now, Gandhi has been holding online conversations with experts over the fallout of the pandemic and the national lockdown. Interestingly, like Bajaj, two key people Gandhi spoke to earlier—former Reserve Bank of India governor Raghuram Rajan and Nobel laureate Abhijit Banerjee—had both highlighted the need for putting more money directly in the hands of the people to incentivize spending and spur local economy.
Bajaj said that for demand to pick up, the government has to provide something that lifts the mood of the people. “We need some mood elevator. And I do not understand why there is no strong initiative, even if it is for a period of 6 months-1 year to strongly lift the mood of the people and provide a stimulus to demand." He also expressed apprehension that the road to recovery may not be smooth, while admitting that he was distressed because getting the supply chain of businesses back in function after a two-month lockdown was a herculean task.
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