FM not averse to providing further economic stimulus, says source

Asserts that recent trends of economic recovery are testimony to government's intervention

Rebutting criticism that the government is tight-fisted, a top finance ministry source said on Friday that recent trends of economic recovery bear the testimony of timely intervention by the government to mitigate the fallout from Covid-induced lockdown. Claiming that Finance Minister Nirmala Sitharaman is not averse to taking further measures to ease the financial distress of the people, the source said the government is exploring all possibilities.

Swift steps taken by the government and recent trends of economic recovery – increase in GST collection, purchasing managers’ index (PMI) for manufacturing, and exports among other numbers – countered the myth of tightfistedness, the source said. “The government has been aware of the ramifications of the Covid-19 pandemic. That is why the finance ministry has been proactively and continuously taking measures to provide support to those who need it the most in a holistic manner. These measures are yielding results.”  

One must acknowledge the swiftness with which the government formulated and implemented two major stimulus packages – Pradhan Mantri Garib Kalyan Package (PMGKP) on March 26 and Atma Nirbhar Bharat Package (ANBP) on May 12, the top finmin representative said. These aggregate to Rs 20 trillion or 10 per cent of the country’s GDP, he added.

All the money and assistance have gone directly through direct benefit transfer (DBT) into bank accounts and in the hands of deserving people, without any middlemen and any delay, according to the source.

“Yet, the critics say that the government has not taken enough demand-side measures by putting cash in the hands of people. Is this not putting cash in the hands of people at the time of distress? If it is not, then what is? Even Bill Gates recently appreciated the way India used its DBT delivery mechanism to reach and help people directly at the time of this crisis,” he pointed out. 

The finance ministry also gave a boost to liquidity in the market by urgently releasing refunds under the special drive worth Rs 1.18 trillion in direct taxes and Rs 66,861 crore in indirect taxes. This is an increase of more than 6 per cent as compared to last year.

He said the Centre continued to lend unflinching support to state governments towards faster economic revival. Despite the pandemic and the consequent fall in gross tax revenue, Rs 2.17 trillion has been transferred to states as devolution of central taxes in the first five months of 2020-21, he added.

Another source said phased relaxation of the lockdown, supported by enabling policies of the government, had resulted in much higher level of economic and business activities in July, August and September.

This is evident in the growth of high frequency indicators like PMI manufacturing, index of eight core industries, GST collections, e-way bills, kharif sowing, power consumption, railway freight, cargo traffic and passenger vehicle sales.

“Prompt action in policy and its implementation clearly dispel the myth that the government lacks consensus or the will to serve its people in a holistic manner. The data proves exactly the contrary,” said the source. Referring to the increase in the Centre’s market borrowings by over Rs 4 trillion, he pointed out that the government would not hesitate to gather funds from any source to meet its commitment.

“Does it indicate any tight fist? This government has shown time and again that it is willing to take tough decisions and go to any extent to help people and the economy,” he said.