The government may bring in a package even at the cost of high fiscal deficit, to improve demand by boosting sentiment, apart from the monetary policy-driven announcement it has made now, said Venu Srinivasan, chairman, TVS Motor Company.
He said it is time to quarantine those who are vulnerable and let the rest of the population get back to work. Speaking at a round table discussion organised by the Chennai International Centre (CIC) on ‘Reviving Tamil Nadu’s Economy – Strengthening Investments, Reforms & Stimulus,’ he said economic downturn is as much a psychological matter as it is an economic one. China has opened up, he said, and according to reports, while Chinese production has picked up, customers have not yet come back fully. He said people who have money say they will wait for the world to be back. There will be a lot of hesitation before people come back. “While the government announced some major steps, that is not enough fiscally. All that is announced is substantially monetary policy-driven,” he added.
Srinivasan said, the government has given loans and made sure that companies, small and medium enterprises (SMEs), in particular, don’t sink due to the issue. But they have to repay those loans and that can be done only if business grows.
He felt the government should have given Rs 5,000 a month for three months to the poor.
“I would expect from the government a fiscal package, even at the cost of having high fiscal deficit, which does raise the problem of current account deficit going up because people start buying imported products, and inflation goes up. But even at that cost the patient in ICU, you give him the medicine which may affect the heart or kidneys, but protect the major organs that you are trying to protect. Today, we have to bring back buying, otherwise industry will not pick up, and therefore give more fiscally than we have given in the last three days of the announcements. That is very crucial for demand to grow,” he added.
According to Srinivasan, India has seen one of the lowest fatalities during the Covid-19 outbreak. While he felt it was a bold decision to lock down a country of this size for so long, especially with limited knowledge on the disease, now there is more data to understand the disease. He cautioned that people above 60 could be asked to go on self quarantine, particularly if they have other morbidities.
“It is time we say there will be infections at work and it is frightening. But it is not so frightening because I don’t know personally one person who has died. In our company, only two people have got infected. It is time to quarantine those who are vulnerable and let the rest get back to work,” he said.