People will lose jobs, warns NITI Aayog chief as he pushes for cash handouts
- In the wake of
Coronavirus, Niti Aayog CEO Amitabh Kantin a recent interview said that India needs to be ready for a huge economic impact.
- He said that people will lose jobs in rural and urban areas.
- Kant said that small businesses should be provided better working capital.
Amitabh Kant, CEO, government’s think tank Niti Aayog described them as ‘extraordinary and challenging times’. In a virtual interview with the Observer Research Foundation, Kant warned of the economic implications – people will lose jobs, small businesses will suffer.
“There will be an economic impact and we should be ready for it. People are going to lose jobs not only in rural areas but urban areas. The state’s first responsibility should be towards people who are at the margin and are going to lose their jobs, and should be able to provide them with a source of livelihood. And that should be in the form of a direct benefit transfer,” he said.
While Kerala and Tamil Nadu announced measures like free ration and a handout, no national level programme to support daily labourers and other small businesses has been announced.
For small businesses, Kant said that we need to look at options of providing them with better working capital. “This is not a time to over-concern yourself with fiscal deficit. This is a time to support the industry,” he said. The government’s fiscal deficit which is the difference between government’s revenues and spending - has ballooned to ₹9.85 lakh crore in the current financial year.
‘RBI needs to look beyond the definition of non-performing assets’
Apart from government, Kant also believes that the central bank should also play a part. According to him, the Reserve Bank of India (RBI) should provide a larger window for repayment of loans by micro and small and medium businesses.
“We have a system where defaults after 90 days are termed as non-performing assets, this needs to be relooked at by the RBI. We need to provide a much much longer window as Coronavirus will go on till about May end minimum and then it will take another 7-8 months for factories to revive themselves,” he said.
This also means that supply chains across the world are broken. Kant believes that this also gives India the massive opportunity to step in and become a major supplier.
“The Cabinet recently passed a scheme for mobile phone operators of ₹42,000 crore, for big manufacturers to establish their supply chain in India. Based on incremental production in India, they will get support. The second step the government took is a ₹17,000 crore scheme for supporting the manufacture of active pharmaceutical ingredients in India,” he said.
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