New Delhi: Government needs to pay GST revenue to states in advance, clear all its pending dues to micro, small and medium enterprises, instantly release income tax refunds and substantially increase healthcare spending as part of the concrete fiscal measures to help economic revival, said economists and industry experts while seeking one time restructuring of worst-hit sectors like aviation, malls and travel and tourism.
This could be financed by pledging government shares worth Rs 12 lakh crore with RBI to take loans, part monetisation of its assets and floating corona bonds, some of them said at the CII-IEG Dialogue Series titled the Rs 21 lakh crore stimulus package– Did it Pack A Punch?
“The centre must come up with fiscal support to boost consumption while also looking into credit side bottlenecks,” Manoj Panda, RBI chair, IEG said while speaking at the webinar. He said the government needs to go beyond what was announced in the earlier package and aim at simple indicators to help people at the bottom of the pyramid rather than bothering too much about average targeting.
Pronab Sen, country director, IGC categorically said that the real heavy lifting of the economy can only be done through fiscal measures and not monetary policy any more. “Indian economy is staring at a huge amount of uncertainty. Revival plans should focus on making sufficient finance available to companies to re-start business and some level of assurance that there will be customers at other ends or consumption demand in the market,” Sen added.
While there was a consensus among all panelists at the CII-IES webinar on Tuesday that the Rs 20 lakh crore stimulus package, amounting to 10% of the GDP, unveiled by the government in May will not directly help revive economy as huge part of it is the form of loan guarantee, there was a near agreement that much more needs to be done by the Centre to help them address the financial constraints in dealing with the Covid-19 pandemic.
Ajit Ranade, chief economist, Aditya Birla Group suggested the government can finance the enhanced fiscal spending by pledging its shares with the central bank. “Government is sitting on stocks worth Rs 12 trillion which can be pledged with RBI to take loans,” he said while suggesting part monetisation of its assets can also help.
Abheek Barua, chief economist at the HDFC Bank suggesting setting up of a corona fund to ring fence and help the government expand fiscal deficit. “The Centre and states should raise money through corona bonds to finance the corona fund to effectively deal with the pandemic,” he added.