Letters to the editor dated October 5, 2020

The government has climbed down from its original stand that any sort of interest waiver would be ‘against the basic canons of finance’, to ‘agreeing for compound interest waiver, during the moratorium period of March-August 2020, for loans up to ₹2 crore’. As this will benefit over 90 per cent of loans in the system and about 50 per cent by value, it should meet the needs of the borrowers worst affected by the Covid-19 pandemic.

‘ICRA’s estimate that the cost to government won’t exceed ₹7,000 crore’ (October 4) would still stress the already stretched fiscal deficit of the economy. As desperate times call for desperate measures, none would fault the lifeline extended to the small borrowers. However, the government’s undertaking to bear the cost is a great relief to banks, especially public sector banks, and depositors. But, post the pandemic, mechanisms such as the IBC would need to be strengthened to enable banks recover their loans. No hand-holding can be for the long term.

Chennai

This refers to ‘Incipient recovery’ (October 5). Indeed, it is just the beginning and we are in for a long haul as what we have seen in the last 3-4 months is some sort of revival specifically in the rural economy, driven by a good monsoon.

GST collections last month also give confidence that there is some positive news at last from some quarters.

To sustain this trend, the government will have to shed the fear of fiscal deficit and accelerate public spending. Expecting Indian Inc to do the heavy lifting will not be justified. More direct cash transfer will go a long way in helping relieve the pain of the underprivileged section of society and, in turn, help consumption revival.

Noida

Signs of economic recovery are on the horizon. Not only did the country’s exports grow in September, but also there was an noticeable spike in the Manufacturing Purchasing Managers’ Index.

Seen as a proxy for factory-level activity, the index had jumped to 56.8 in September from 52 in August. In August, the output of India’s core eight sectors of infrastructure had declined by almost 9 per cent.

The growing demand for personal mobility in the wake of the Covid pandemic has pushed the sales of two-wheelers and mid-size cars. Despite the positive news, aggregate demand has continued to be sluggish and is expected to continue so until the government loosen its purse strings and stimulate demand through its robust spending measures. It is time the Centre shed its fiscal conservatism mindset and ushers in a fiscal stimulus package in proportionate to the challenges confronting the country’s economy.

Sholavandan, TN

For eminence in manufacturing we ought to profitably study the Chinese ethos and approach. China was able to take a micro view of its road to industrial growth. It developed Chinese SMEs, from family operations catering to a local market to global powerhouses. Special zones painstakingly nurtured the Chinese SMEs to play a critical role in its astonishing industrial development in just two decades. Its manufacturing value-added output has been growing at 12.8 per cent per annum (1.9 per cent growth in Japan, 1.4 per cent in the US, and nil in the UK ). And it accounts for 27 per cent to global manufacturing value addition.

These are peaks that we may not be climbing for many years, yet we ought to combine their authoritarian prescription tempered with our democratic ethos of consultation and leadership acumen. We must aim for effective communication, easy availability of land special economic zones (SEZs), ready-to-move-in facilities, sector-specific business-friendly regulations, a simple labour code, tax breaks, and other incentives aimed at bringing its manufacturing competitiveness. ‘Make in India’ lies in smaller but innovative hands and minds. And we have an enviable demographic dividend, denied to others.

Navi Mumbai

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