NEW DELHI: Only a tenth of the ₹20 trillion worth of stimulus the Centre announced last month, to help people and businesses to tide over the covid-19 crisis, makes for direct support which is way less than what other countries have offered, industrialist Rajiv Bajaj said on Thursday in an online conversation with former Congress president Rahul Gandhi.
Bajaj’s comments articulate the belief among Indian businesses that the measures announced are inadequate and should not have been routed through banking channels at a time when the economy is likely to contract sharply.
Bajaj added that the government should look at restoring confidence among people, which was critical for reopening the economy as fear poses a big challenge to recovery.
“…I am told in many places in the world, two thirds of what the government has handed out had gone to organisations and people as direct benefits. Whereas in India, it has only been 10%," Bajaj said, citing examples of direct cash benefits given to big and small businesses as well as citizens from governments in other countries to stay afloat during the crisis.
Bajaj said he strong believes that to revive demand, the government must do something to boost sentiment. “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," the managing director of Bajaj Auto said.
He also expressed apprehension that the road to recovery may not be smooth while admitting that he was distressed because restoring supply chain after a two-month lockdown will be a herculean task.
Job losses and the economic contraction expected this fiscal threatens to push many people into poverty, a social and economic challenge for the Narendra Modi administration. The union government is under pressure from key states and opposition parties which have been demanding cash payouts to spur spending capacities.
“There are people right now, screaming in pain and the most obvious are the manual labourers, daily wagers. And maybe the farmers and the small and medium businesses. But big businesses are also screaming in pain, because they don’t see a future. So a huge component of it, is building confidence. The leadership, to build confidence, (has) to say, okay listen we are here," Gandhi said in his observations adding that the economy had been slowing even before the pandemic and unemployment has been a key cause of concern.
This was fourth in the series of online conversations that Gandhi has been holding with experts to discuss the fallout of the pandemic and the ensuing lockdown. Interestingly, like Bajaj, two key people Gandhi spoke to earlier-- former Reserve Bank of India governor Raghuram Rajan and Nobel Prize winning economist, Professor Abhijit Banerjee--had both highlighted the need for more money in the hands of the people to incentivise spending and revive economy.