Time to rebuild demand, says principal eco adviser

Principal Economic Adviser Sanjeev Sanyal on Thursday said time has come to give a push for reinflating demand in the economy hit hard by the COVID-19 pandemic.

He also said there are certain sectors like hospitality which need "special love and care."

"There has been a big shock to the system and we need to rebuild demand. Some of it...Happens to be comingback naturally but not in every sector.

"There are some sectors that still are held back, hospitality being an obvious one. So let me say that we recognise this issue...," he said a virtual conference organised by CII.

He added that there are some "specific issues with sectors like hospitality, they need some special love and care. By the way, they are very tricky to do, given how dispersed it is."

He clarified that the government was reticent to provide a large demand stimulus during the lockdown as it would have not yielded the desired results.

"As our foot is coming off the brake, we do want to press the accelerator. Now some of it will be generic pressing of accelerator...A generic push for reinflating demand, the time has come...We do recognise the need to rebuild demand in a fuller sort of way and not just provide safety net which is what we were doing so far," he emphasised.

The comments come a day after Economic Affairs Secretary Tarun Bajaj said that the government is open to further stimulus measures to boost the economy.

Finance Minister Nirmala Sitharaman had announced a slew of measures to spur demand and ramp up capital expenditure earlier this month. This was the third stimulus package since the outbreak of the COVID-19 pandemic.

The government had announced a Rs 1.70 lakh crore Pradhan Mantri Garib Kalyan Yojana (PMGKP) in March to protect the poor and vulnerable sections from the impact of COVID-19 crisis.

It was followed by the Aatmanirbhar Bharat Abhiyan package of Rs 20.97 lakh crore in May, largely focussed on supply side measures and long-term reforms.

Earlier this week, Sitharaman had said the option for another stimulus package has not been closed.

Sanyal further said "there are areas where we think we do need to provide some strategic support. Some of them maybe for strategic reasons like defence. We do need to protect and allow for certain amount of protection for domestic production of some of the critical inputs where particularly it comes from a single source."

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This is not about providing protection to an inefficient industry, he clarified, adding it is about improving the resilience of a highly competitive sector.