FM Sitharaman says Rs 21 lakh crore economic package working, more steps likely to prop up economy

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Updated: Jul 22, 2020 9:31 AM

Highlighting the emergence of green shoots in the economy, FM Sitharaman said power consumption is growing, rabi crop arrivals have been good and the prospects of summer-sown crops look promising

Addressing an event of the US-India Business Council (USIBC), the FM Sitharaman highlighted that the government used the crisis as an opportunity to push through structural reforms in crucial sectors, including agriculture. (File image)

Finance minister Nirmala Sitharaman on Tuesday asserted that the raft of relief measures announced by the government through the Rs 21-lakh-crore package have made a big difference to companies coping with the impact of the Covid-19 pandemic and pledged more steps, if required, to prop up the economy.

Addressing an event of the US-India Business Council (USIBC), the FM highlighted the government used the crisis as an opportunity to push through structural reforms in crucial sectors, including agriculture.

Green shoots have started emerging in the economy and the rural economy, especially, is showing signs of faster recovery, she added.

Speaking at another session of the USIBC, commerce and industry minister Piyush Goyal suggested that both India and the US could hammer out a quick trade deal (which has been in the works for some time now). “We should be able to get the quick trade deal out of the way after a few more calls. India and the US must sit down to negotiate a robust FTA (free trade agreement) but before that we can even look at an early harvest trade agreement for 50-100 products,” Goyal said. He also suggested that the government could soon lift curbs on ventilator exports, as domestic supplies remain steady.

Both Sitharaman and Goyal highlighted that India hasn’t abandoned the principle of free and fair trade and ‘Aatmanirbhar Bharat’ is neither protectionist nor isolationist. Both the ministers also stressed the government’s commitment to predictability in policy regime and also to make it even easier for foreign players to invest in India.

Goyal said: “Self-reliance does not mean closing doors, but to open them wider.” He said India wants to fill in the gap and trust deficit in the supply value chain as a trusted partner, he said, without, however, citing growing global mistrust of biggest exporter China.

Sitharaman highlighted various schemes under the government’s Rs 21 lakh crore relief package, meant for the poor and the vulnerable (through cash transfer) and critical sectors, including agriculture, MSME, infrastructure and shadow-lending. The relief includes collateral-free, extra working capital loans for MSMEs (up to 20% with a cap of Rs 3 lakh crore) with official guarantee, which was expected to benefit 45 lakh of such units. Liquidity to the tune of 3.9% of the GDP has been infused to enable businesses to rebound fast. Subsequently, Prime Minister Narendra Modi said the subsidised grain supply scheme would be extended by five months through November, which will cost the government Rs 90,000 crore more.

“Industry, together with government, will ensure a speedy recovery post-pandemic and the GOI has a goal of ensuring a greater level of policy consistency and transparency. That has been a driving system behind what they’re doing we are doing,” Sitharaman said.

Various economists and analysts have predicted an up to 6.8% contraction in GDP growth in FY21, while they are divided over the possibility of a sharp recovery in FY22.

However, highlighting the emergence of green shoots in the economy, Sitharaman said power consumption is growing, rabi crop arrivals have been good and the prospects of summer-sown crops look promising. Tractor sales are up and farmers, for the most part, are getting good prices for their produce.

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