The government moved ahead towards bringing the economy back on track by releasing the third package soon.

News of a major relief was received through Economic Affairs Secretary Tarun Bajaj on Monday. Bajaj said that Union Finance Minister Nirmala Sitharaman is going to announce an economic stimulus package soon. Before him, Union Finance Secretary Ajay Bhushan Pandey has also said that the government will intervene at the right time to give more momentum to economic activities.

If the economic indicators of the last few days are taken into consideration, there can be no better time to issue such a package. This is because it will provide necessary support to the economic activities that are gaining momentum after the Corona Crisis, while its effect will also be seen in the form of increase in demand from employment generation. On the economic front, such fast revenue will fill the government’s bag and the economy will again look full.

Initial reluctance: Since the knocking of the Corona crisis, the Central Government has so far issued two stimulus packages. However, considering the severity of the crisis, they were considered insufficient. Since then the need for a third and a comprehensive package has been felt. The government also never denied such possibilities, but in view of the increasing pressure on its financial resources, it also seemed somewhat hesitant. It also showed direct conflict with states over GST compensation. The fiscal deficit data between April and August also stressed the government’s muscle. During this period, the fiscal figure reached the level of Rs 8.70 lakh crore, crossing the prescribed limit for the entire financial year to 109.3 percent of the original estimate. It was also a reason that in the current financial year the government moved between October to March 4. Decided to stick to its original target of borrowing Rs 34 lakh crore. In such a situation, the prospects of a third stimulus package seemed far-fetched, but recent statements by the North Block bosses have resumed weak expectations of relief.

Found scope:The economic activity that gained momentum after the unlock broke the government’s reluctance and provided scope for an incentive package. The GST collection figures crossed the Rs 1 lakh crore mark for the first time in October after the lockdown. Due to the festive season, the October-December quarter has always performed better, so this time the same expectations are being raised. Also, the demand for loans registered a growth of 5.8 percent in October. Manufacturing PMI also touched an all-time high of 13 years. Anyway, during the lockdown, the picture of the economy may have looked somewhat dull due to the economic slowdown, but during this time (between April and August) also 35 in the country. 73 billion dollars of foreign investment came. At the same time, foreign exchange reserves also crossed the psychological mark of $ 500 billion for the first time and are currently at a record level of $ 560 billion. All these aspects reflect widespread trust in the Indian economy. Now the government has to take steps towards strengthening this trust through a third stimulus package.

How should be the form: The government may not have announced the package yet, but the experts are already suggesting all its forms. The biggest question in this is how big its size is, but even more important question is what should be its type. Pranab Sen, the country’s renowned economist and chairman of the Single Standing Committee on Economic Statistics (SCES), suggests that the government should issue an incentive package of at least Rs 10 lakh crore, or the equivalent of around five per cent of GDP. Recognizing the pressure on the state exchequer, Sen has also said that at present, the government does not even have the scope to give more than this package.

However, underlining its importance, he said that if the government did not release this package, the economy may have to wait for five years to reach a pre-Corona level. However, sensing the exaggeration of the situation, some experts are of the opinion that a package equal to two to two and a half percent of GDP can also prove to be effective. Just have to ensure the quality of expenditure in it. Although the arithmetic of the fiscal deficit will be messed up by this package, the balance on this front can also be adjusted later. Remember that in the exercise of facing the global recession of 2008, the fiscal deficit of the Center crossed the level of more than 6.5 percent, surpassing the Lakshman Rekha of Fiscal Responsibility and Budget Management (FRBM), but later it was overcome. Was taken

How to execute: On the proposed package, Economic Affairs Secretary Bajaj said that the emphasis will be on boosting demand. At the same time, Finance Secretary Pandey says that the government has identified some special areas to give relief, which was the worst hit by the Corona crisis. This certainly gives some glimpse of the government’s intention to conceptualize the package. This intent also seems reasonable, as the enterprises most affected by the Corona crisis have long been waiting for the ointment. Out of these, activities in areas such as hospitality and tourism have come to a standstill, which are also medium of employment generation on a large scale. In such a situation, if the government identifies the affected areas of Corona and makes specific provisions for them within the package, then its results are sure to come. This will also promote employment generation. As a result, increased purchasing power will support demand,

Some cash transfers may also be planned to increase demand. In this, a time limit should be fixed for the expenditure, so that people do not deposit that money in their accounts and the expected benefit of this exercise is left. Since the volatility in global markets has increased at the moment, the good of our economy can be increased only by increasing domestic demand. In this sense, increasing domestic demand will not only be necessary, but will also be mandatory. In this series, under construction and proposed infrastructure projects should also be taken forward at a rapid pace. He will get double benefit. One would be ease of movement and wider productivity of the economy. At the same time, this will create employment opportunities on a large scale, along with supporting industries like steel, cement and heavy machinery.

The package can be effective from these aspects:

Infrastructure

One of the biggest hurdles in the way of capitalizing on the immense potential that exists in the Indian economy is considered to be poor infrastructure. Although significant work has been done in this direction during the last few years, but it is still below the expected level. In such a situation, by increasing spending on infrastructure, the government will not only lay the foundation for a better future for the economy, but it will also benefit many ancillary industries. It will also have an important role in employment generation.

Aviation and hospitality

Although there is hardly any area untouched by the Corona crisis, but this disaster of the hospitality industry involving tourism, aviation and hotels and restaurants has completely broken the backbone. Employment of people on a large scale is directly and indirectly connected through these areas. Therefore, the government should focus on this and such a plan should be made so that domestic tourism can quickly take off after the phased exit of the corona-related restrictions.

real estate

This epidemic further worsened the condition of real estate already suffering from Corona. In such a situation, the government should find an effective mantra for improving this market, so that the economy can be supported with its passage. Measures should also be taken for this area in the package, so that the way for the sale of unsold houses is opened, so that the developers can pursue the stuck projects. There is a lot of potential in the urban housing sector to be redeemed. It is also an important area for employment.

Coupon scheme

In the first and second incentive packages, there was a lot of discussion on direct transfer of funds to people’s accounts. Although the government also transferred funds to Jan Dhan accounts, it could not prove to be as helpful in effectively increasing the demand. In such a situation, such a coupon arrangement can be made in the forthcoming incentive package, whose time should be fixed. This will encourage people to spend money instead of keeping it in the account.

Banking reform

In the recent times, the government has made a move from agriculture to labor reforms, but the banking sector is still looking for comprehensive reforms. The government should also use the situation arising after the Corona crisis to materialize banking reforms. In this, along with providing them capital, important steps like giving autonomy should be taken. It would also be beneficial for the economy to include this sector in the package.