Restarting economic activity is essential and a fiscal stimulus package should be the underpinning of that effort believe two seasoned economy watchers.
Ajay Shankar was Secretary, Department of Industrial Policy and Promotion (DIPP) in the government of India and he was part of the core team which worked out the 2008 stimulus package for India. He believes there are many lessons to draw from the 2008 experience and the government must provide relief on FRBM limits for states, as well as turn its focus to large-sized stimulus measures for the MSME sector at this point.
The thought is echoed Prem Shankar Jha an economist, journalist and writer. He says the current crisis and those impacted by it must be seen in the same vein as a “tsunami” that has hit the economy. He asks, “When citizens are affected by a cyclone or a natural calamity, they are not asked to pay for the relief that is given to them, why are we doing it now ?”
Jha also says the recent comments by the Chief Economic Advisor saying ‘there are no free lunches’ are flawed because attempting to protect macro-economic fundamentals without spending, is actually destroying those very pillars on which the economy stands.
Shankar believes that a lack of stimulus from the fiscal side will deliver a hard (and longer) blow to the economy and negative growth for this year.