Kolkata: The government is likely to unveil specific measures to revive demand when the uncertainties in relation to Covid-19 would no longer be there, chief economic advisor Krishnamurthy Subramanian said. “We are keen to take demand side measures. A right time to increase demand is the time when uncertainty goes,” he said on Friday while he was interacting with Kolkata-based businessmen.
The economy is suffering from a demand meltdown ever since the country went on a lockdown to curb the spread of the pandemic. The severe lack of discretionary spending gripped the system as consumers look to conserve cash amid job losses and salary cuts across levels. Even the Jan Dhan account holders, for whom the marginal propensity to consume is relatively very high, have merely withdrawn 50 percent of the money transferred to them through various government schemes, State Bank of India chairman Rajnish Kumar had earlier said.
Subramanian said that the discretionary spending may not rise till the world gets a coronavirus vaccine. He was speaking through a video-call organised by Bharat Chamber of Commerce. The third largest Asian economy has been facing a slowdown since 2018 and Covid-19 has added to the woes with issues like reverse migration of labour, job losses and severe pressure on the healthcare system hitting hard. India’s gross domestic product is likely to squeeze in FY21 for the first time in four decades.
“The employment scenario is going to be the pain point for this year. Rural economy is incapable of absorbing the huge exodus of migrant labour”, Soumya Kanti Ghosh, group chief economic advisor at SBI, said in another webinar arranged by Indian Chamber of Commerce. Several top economists are of the opinion that the government needs to spend more to revive demand and sustain it. Some even are suggesting extreme steps such as monetising the deficits through printing currency notes.
Source: indiatimes.com