New Delhi, Jun 13: The government's Rs 20.97 lakh crore rescue package for the coronavirus-hit economy is not cast in iron, there is a scope to finetune it and the government has to kickstart demand to stimulate the economy, said PM's economic advisory council member Ashima Goyal on Saturday.
“The economic package is not cast-iron; there is scope to finetune the economic package," she said while addressing a virtual seminar organised by the PHD Chamber of Commerce and Industry.
Goyal, a part-time member of the Economic Advisory Council to the Prime Minister (EAC-PM), added that much of the stimulus pertained to the financial sector, and sequencing of demand and supply is very important to stimulate the economy.
The government last month unveiled a Rs 20.97 lakh crore economic package, which includes RBI's Rs 8.01 lakh crore worth of liquidity measures.
Finance Minister Nirmala Sitharaman had announced the package in five tranches, which included Rs 3.70 lakh crore support for MSMEs, Rs 75,000 crore for NBFCs and Rs 90,000 crore for power distribution companies, free foodgrains to migrant workers, increased allocation for MGNREGA, tax relief to certain sections and Rs 15,000 crore allocated to the healthcare sector.
On the revival of India's growth, Goyal said the COVID-19 pandemic is a temporary exogenous shock for the economy.
"We see a whole range of economic growth forecasts when human capital is intact then you see a sharp recovery after the real shock," said Goyal, also a professor of economics at IGIDR.
The Indian economy grew at its slowest pace in 11 years at 4.2 per cent in 2019-20. Added to that, the COVID-19 outbreak and subsequent lockdowns have severely disrupted economic activities.
S&P Global Ratings and Fitch Ratings have said India's economy will shrink by 5 per cent in the current fiscal, while Moody's has projected a contraction of 4 per cent.
Commenting on India's foreign exchange reserves crossing the $500 billion mark, Goyal said, ''Our foreign exchange reserves are borrowed reserves. The best way to increase foreign exchange reserves is to attract investment."