The Communist Party of India (CPI) on Tuesday said the stimulus package announced by Union Finance Minister Nirmala Sitharaman on Monday offered no incentives to boost demand, which was key to revive the economy.
The CPI pointed out that while announcing the ₹6.28 lakh crore package, the Minister did not mention where the funds would be mobilised from. “Is this a part of current budget expenditure?”, it stated.
The party noted that most of the measures were credits tied to bank guarantees. “In the present times of poor demand, this would add up to more indebtedness as interest rates range from 8.95 per cent to as high as 11 per cent. In short, the government’s stimuli continue to weigh on the supply side rather than boosting demand,” a statement from the party said.
These were credit-based stimuli of long and medium term instead of provision of immediate relief to the pandemic affected sectors. “The Centre has shifted the responsibility of health infrastructure creation and power sector reforms on State governments with no extra grants but only promised bank credit at high interest rates,” the CPI said.
There were no incentives offered for job creation. The package also did not increase the working days and wages of the MGNREGA, which was essential to support the rural economy. There were no big capital infrastructure projects that could pitch in to create employment. The interest rates on which bank credit were being offered to the MSME were very high, it observed.
