However, he added that the demand for a new stimulus package should be seen in the context of a series of initiatives taken by Finance Minister Nirmala Sitharaman in her budget for 2021-22 presented in February.
The Chief Economic Adviser was responding to a suggestion made by some industry bodies that the government needed to present a stimulus package of Rs 3 lakh crore to boost the economy, which was severely affected by the second wave of the coronavirus pandemic. in April-May.
According to an assessment by the Reserve Bank, the second wave has cost the nation around 2 lakh crore rupees in terms of lost production.
“Like last year, we remain very open to proposing more measures as well … but I think it is really important to take into account the big differences between last year and this year when we talk about stimulus,” he said. In an interview.
Developing its point, the CEA said that unlike the previous budget that was framed before the pandemic, the 2021 budget was introduced in the midst of the pandemic and had already incorporated significant fiscal expansion.
The focus is particularly on infrastructure spending that leads to construction activity and subsequently to job creation in the informal sector and demand generation, he said. It was witnessed during the January-March quarter of the last financial year, he added.
Significant government capital spending led to a 15 percent rise in the construction sector in the fourth quarter and gross fixed capital formation to GDP rose to 34 percent, the highest in the past six years.
By emphasizing that the ultimate goal is to ensure that the economic recovery accelerates, he said, the government will do whatever it takes to ensure it.
Regarding food security for the poor, he said, the government has already extended the free food program for a population of Rs 80 million until November.
Prime Minister Garib Kalayan Yojana’s extension would cost around Rs 70 billion, he said, adding that free vaccination for all is another important economic measure.
“The vaccine as I would appreciate is by far the most important from a perspective to get back on the path of economic recovery,” he said.
On the effect of the second wave on growth, Subramanian said, there will be some impact, but it is not likely to be very large.
The 2020-21 Economic Study released in January this year had projected 11 percent GDP growth for the current financial year ending March 2022.
India’s economy contracted 7.3% less than expected in the fiscal year ending March 2021 after the growth rate recovered in the fourth quarter, just before the world’s worst outbreak of infections. by coronavirus hit the country.
The GDP impression was better than the expected contraction of 8 percent for 2020-21 as projected by the Economic Survey.