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In an exclusive chat, The Quint’s Editorial Director Sanjay Pugalia interacts with Mahesh Vyas, MD & CEO, Centre for Monitoring Indian Economy (CMIE) to know more about the impact of the lockdown on the economy, jobs and business. Vyas is of the opinion that Centre’s Rs 20 lakh crore package is not the solution to the crisis.
Dr Vyas argues that the Centre’s Rs 20 lakh crore package is not as encouraging as it is being touted to be. More importantly there is a provision of loans. So the problem is that people who are unemployed or who work in small industries are already in trouble, how will they take loans and then repay them as well. So, this is a plan to create a situation of debt.
Dr Mahesh Vyas is of the opinion that the condition of big industries is poor, and has been so for the last 3-4 years. The net fixed asset growth rate of these companies was around 23 percent in 2008-09. But after that, it started falling. There was some growth again in 2015-16. But in 2018-19, this rate came down to 5.5 percent. This happened even when the companies had good profits, but there was so much concern about the future in the companies that they did not want to take the risk of creating new capacity.
Dr Mahesh Vyas said in the interview that during the Vajpayee government there was a problem of low demand, following which he started the highway project and pulled up the economy. Similarly, in 2004, during the Manmohan government, the economy was started by increasing SEZ policy and increasing government spending.
Dr Vyas said that though the government is giving relief in tax, the problem now is with demand. The easy solution would be to give money in the hands of the poor.
Dr Vyas estimates that in April alone, 12.2 crore people have lost their jobs. There is a possibility that the situation in May is worse. Out of these 12.2 crore, two crore were employed people and 9 crore were street vendors. If the economy comes back on track, then the shop of street vendors will open again, but if people do not get jobs, then who will come to the street vendors to buy the products?
According to Dr Mahesh Vyas, the country wants to know what fear led to the sudden announcement of lockdown and what led to sudden relaxations.
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