The first tranche of measures from the ₹20 lakh crore stimulus package, as enumerated by Union Finance Minister Nirmala Sitharaman to cushion the impact of COVID-19 on the economy, is “disappointing”, said former chief minister and senior Congressman Prithviraj Chavan on Wednesday.
Speaking to The Hindu , Mr. Chavan, who initially welcomed Prime Minister Narendra Modi’s announcement of the stimulus package, said it is totally deceptive as the cash grant element, which is the need of the hour, is “completely missing” in Ms. Sitharaman’s detailing of the measures.
“It appears that the Centre has not understood the concept of a stimulus package. The ₹20 lakh crore should have been paid upfront. Given that no one knows how long the pandemic will remain, every economy in the world is going to be badly hit. In this bleak scenario, where production is negative and every industrial unit is sinking, what collateral-free loans are we talking about?” Mr. Chavan asked, hitting out at Ms. Sitharaman’s speech.
Expressing concern over the declining level of purchasing power, he said with job losses and pay cuts, the demand for manufactured goods will plummet sharply in the near future as people will only be able to concentrate on essentials.
He said that given the certainty about the lockdown being extended, small businesses are struggling to survive and need cash infusions urgently. “Small businesses have incurred massive losses. How are they going to pay their employees, sustain expenses? A strong cash grant infusion by the Centre in this hour of crisis can help give employees a sense of social safety. The Centre should go the way of the American government, which has injected $850 billion in form of cash grants for paying off salaries,” he said, adding the Centre must find means of borrowing this massive sum and that it could absorb a fiscal deficit of 10%.
As a way to secure money for this stimulus package, Mr. Chavan suggested the Centre lay its hands on the gold stock lying in religious trusts across the country, which he said will help generate at least ₹76 lakh crore.
“As per the figures given by the World Gold Council, India’s religious trusts have $1 trillion dollar in gold with them, which amounts to ₹76 lakh crore. This gold can be borrowed through gold bonds at a low interest rate of say 1 or 2 %. This is an emergency,” he said.
He said if the Centre borrowed from these trusts at a nominal interest rate, the money could be spent on the lower income groups, thereby boosting their income capacity.
“The gold lying with these trusts is the government’s and the current economic crisis is way more serious than a wartime situation. This gold can be utilised for printing money as well as for raising funds from the open market,” Mr. Chavan said.
