Stimulus package aimed at triggering demand: FM Nirmala Sitharaman

Finance Minister Nirmala Sitharaman said the economic stimulus package unveiled by the government under the Atmanirbhar Bharat Abhiyan will enable businesses to open up, which will then ensure workers are paid their wages.

In an exclusive interview to CNN-News18, she said the focus of the first package under the PM Garib Kalyan Yojana, which came soon after the lockdown was announced, was to ensure that no one goes hungry. When the new package was ready for announcement, the message to us from the prime minister was to be careful not to leave out small businesses, FM Sitharaman said.

On the question of why the government did not choose to resort to suggestions of directly putting cash in the hands of the people, FM Sitharaman said: "Many have suggested that money should be given directly to the needy but I think this package announcement was the best way to help them."

Demand, she added, is created not just when you and I go to purchase bare essentials.

"It is also the case when small units have to pay wages and fixed costs, companies open up and buy raw materials, payments made to wage earners who then make payments towards their bills and other things," she said.

She explained that the idea behind choosing this route was that the stimulus package will have a cascading effect. Businesses will now start, it will be ensured that wages are now given to the workers. That is how they will have cash in hand, she said.

With respect to the criticism from states regarding the conditional provision of additional borrowing, she said if the condition of reforms were linked to the money that goes to states under devolution, that would have been against the constitutional ethos of federalism. However, the states had requested that the cap on borrowings be raised, and that is where we linked the same to reforms, Sitharaman added.

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