Chief Economic Adviser Dr Krishnamurthy Subramanian said in an interview on Thursday that only providing jobs and not handing cash in the hands of people will increase demand. Answering a question if the Atmanirbhar Bharat Stimulus 3.0 announced by Finance Minister Nirmala Sitharaman on Thursday would help jumpstart the economy, Subramanian said that slight improvement was already seen during the lockdown.
"Putting cash in people's hands may not increase demand. Job creation measures, which have been announced, will increase demand. Let's acknowledge the Covid-19 pandemic is still not over," he said in an interview with India Today TV.
He said that job creation is a demand-size measure and that it is not clear whether putting cash in the hands of people will increase demand. "What's needed is assured income. Employment will increase demand," he said.
CEA Subramanian said that data for manufacturing shows that there is recovery, and said that the government is to be credited for its significant reforms. "India has been the first country to do so to ensure manufacturing isn't impacted," he added.
Speaking about risks of COVID-19, Subramanian said that the country needs to be cautiously optimistic. "We have to guard against a second wave, going into the festive season," he said. Subramanian, however, highlighted that the need for social distancing due to the pandemic has affected sectors like hospitality and tourism.
Talking about comparisons with Bangladesh's growth, Subramanian said that India has done far better when it comes to per-capita numbers. "We must do apple-to-apple comparisons. Data shows we have managed the pandemic well, and the recovery continues. These reforms will enable the primary and secondary sectors of the economy. And that will create jobs and increase demand," he said.
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