With the Indian economy facing the headwinds of the coronavirus pandemic, coupled with a degrowth in the economy, the government needs to step up spending to revive demand before it becomes too late, HUL boss Sanjiv Mehta said recently.
The uptick in demand is expected to gain momentum in the coming weeks with the festive season round the corner.
With the Indian economy facing the headwinds of the coronavirus pandemic, coupled with a degrowth in the economy, the government needs to step up spending to revive demand before it becomes too late, HUL boss Sanjiv Mehta said recently. “Aggressiveness has to come in, bold measures have to come in and the government is willing to take the risk,” he said in a recent interaction with FICCI president Sangita Reddy. Sanjiv Mehta, who is CMD of FMCG giant Hindustan Unilever, is also vice president of FICCI. Stating how demand will lead to more investments, he said that investments will then create more employment. “The confidence will go up, people will start spending more and the economy will again, hopefully go back to the kind of rhythm we have seen in the past,” he said.
While higher spending may lead to higher inflation, the government must take the risk, he suggested, adding that interest rates also need to be cut after signs of urban distress due to the economic fallout of the COVID-19 pandemic. “There is a curve of cost of doing and the cost of not doing,” Sanjiv Mehta said. The country will be in an unfortunate state and the government must not let that happen. In the current situation, the cost of not doing exceeds the cost of doing and the risk of being aggressive with spending must be taken now. “Because, if we don’t do it now, then it might become a bit too late,” Sanjiv Mehta said.
The Indian economy has been ravaged by the COVID-19 outbreak, with the gross domestic product (GDP) diving nearly 24% in the April-June quarter. Nearly six million white collar professional jobs were lost between May and August, according to data from the Centre for Monitoring Indian Economy (CMIE) and every sector, with the exception of agriculture, has shown a degrowth. While a mass number of migrants were displaced from cities due to now work, the government said that it does not have data on either migrant workers’ job losses or their deaths.