Stimulus package should be broad-based, like Budget: NITI Aayog chief | Business Standard News

Clipped from: https://www.business-standard.com/article/economy-policy/stimulus-package-should-be-broad-based-like-budget-niti-aayog-chief-121053000658_1.html

In a Q&A, Amitabh Kant says the package should aim to lift growth instead of picking specific sectors for assistance

Amitabh Kant said that there won’t be any delay in privatisation, including that of two public sector banks, and NITI Aayog has already made its recommendations.

A technologically-driven process for Covid-19 relief distribution is ensuring last-mile delivery of aid received from foreign countries and individuals is smooth and transparent, NITI Aayog CEO Amitabh Kant tells Nikunj Ohri in an interview. Kant, who chairs the empowered group on coordination of Covid-19-related relief and response activities, also said any stimulus package for the country should be broad-based like the Budget to lift growth rather than picking specific sectors for assistance. He said that there won’t be any delay in privatisation, including that of two public sector banks, and NITI Aayog has already made its recommendations. Excerpts:

1. How is aid (vaccine, medicines) from abroad being distributed to states? How is the government ensuring states receive such medical supplies on time, and in a fair manner?

Aid is being sent through three channels–-government, private sector and through states, NGOs and Civil Society Organizations (CSOs) directly to those impacted by Covid-19. NITI Aayog coordinates with private donors through the CovAID platform, which allows them to fill their intent to donate and track the status of their shipments. The Minstry of External Affairs is coordinating with donor countries through the Integrated Covid Aid Tracker. Two portals have been developed to ensure the process is completely digital, and allocations shall be done by MoHFW as per a Standard Operating Procedure (SOP). In case of direct sourcing of aid by States/NGOs/CSOs, a nodal officer has been appointed for each state/UT and speedy customs clearance is facilitated.

While allocating, priority is accorded to medical hubs and states/UTs with high-caseloads-which keeps changing because different states are peaking at different times. Importance is given to states/UTs with scarce resources, and to those that may have physical connectivity issues which would cause delays in supply if sent at the last moment.

2. A real-time portal has been created to monitor distribution of foreign aid, including vaccines. How is the distribution tracked?

Technology is streamliming the entire process of aid distribution and making it transparent and digital. Two portals have been developed in partnership with private technology companies like Flipkart, Nagarro, Cloudstack, MapMyIndia, Freshworks, Amazon and Microsoft. We have onboarded logistic service providers, Indian Airforce, Indian airlines and other stakeholders on to the platforms so that end-mile delivery of aid is smooth and transparent. Real-time tracking of consignments through the GPS tracking system present in all the trucks is undertaken. The robust monitoring system not only tracks the location and status of the cargo, but also checks utilisation. This is done by means of geo-tagged photos and videos, which have to be uploaded by final destination institutions

3. How bad is the impact of the second wave on the economy?

It has not been as bad as it was in the first wave. Throughout April, manufacturing activity and exports were robust. Economic activity is likely to be impacted in May, owing to various state-level lockdowns, but a rebound is expected once states start unlocking.

Vaccine manufacturing capacity is being scaled up, and as more people are inoculated, we are protecting ourselves from a potential third wave.

Global demand is also expected to remain elevated in the coming months as developed countries are fully vaccinated. Economic activity is picking up momentum, aided by fiscal and monetary stimulus packages. While there been an impact on economic activity, it is not as profound as the lockdown last year. On the back of rising global demand and increasing vaccinations, economic activity is likely to pick up again in the coming months.

4. Is the government working on yet another stimulus package for the country to boost economic growth? Which segments need the most assistance now?

In calling for stimulus packages, economists often advise the government to raise investments in public infrastructure, given their large multiplier effect. In Budget 2021, capital expenditure was raised by 34.5 per cent over the budget estimates of 2020. It is also important to understand that these policies impact the economy with a lag. The impact of the expansion of capital expenditure is likely to be spread over years.

It is important to boost growth holistically, across all sectors of the economy. A key highlight of Budget 2021 was that it promoted broad-based growth, instead of picking specific sectors for assistance. Therefore, any stimulus package should be broad-based and focus on raising growth across all sectors, like previous initiatives. The government is prepared to act, but it is important to get the timing right. Last year’s announcements supported the post-lockdown bounce-back in growth, and the effects were visible until April 2021.

5. MSMEs have requested more relief from the government apart from the restructuring announced by RBI. Is the government working on new relief measures?

The government is prepared to act, like it has in the past. But it must get the timing right. Since MSMEs exist across the entire gamut of the economy, a broad-based view of growth, unlocking supply bottlenecks and raising employment and demand, will enable all our MSMEs to grow. Therefore relief measures must be be broad-based and aimed at boosting growth and employment across the economy.

6. What impact will the second wave have on the government’s privatisation push? Will the new privatisation proposals be delayed by a year?

I do not think the privatisation proposals will be delayed by a year. Globally, there is a lot of liquidity in markets fuelled by easing fiscal and monetary policies. India has seen a record $37 billion foreign portfolio investments (FPI) in equity markets. Increasing participation by domestic investors and foreign investors indicate underlying confidence in the Indian economy. With the global liquidity in markets, and confidence in India, this perhaps the best opportunity to push through privatisation and disinvestment.

7. Will the government stick to its target of privatising two PSU banks and one insurance company, as announced in the Budget?

No delays are expected in the privatisation proposals. NITI Aayog has already made its recommendations.

8. How is the government preparing for a potential third wave of Coronavirus?

We have to let our current experience guide us. Streamlined distribution of oxygen and a green corridor for quick transport via road, rail and air are needed. Our focus should then be on how we prevent hospitals from getting overwhelmed–this would happen when hospitalisations reduce.

We need early detection of the virus and must make medical advice available without delay. If correct and timely treatment is not provided, hospitalisations will rise. Do-it-yourself rapid test kits are now available for testing at home. And, the vaccination programme needs to be accelerated. The government has extended grants to Indian vaccine makers to raise production. Sputnik has been approved and two cargoes have arrived.

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