She said more spending can be done to improve primary health services. “One reason Kerala has done well is that it has much better primary health infrastructure,” the economist said.
Goyal emphasised on the sequencing of the Rs 20 trillion packages, which she said has not been commented upon much.
The package started with liquidity measures from the Reserve Bank of India (RBI), followed by DBT to women and then Atmanirbhar.
“This sequencing is important. Stimulating demand when people can go out and buy is more important than doing it when they are sitting at home,” she said.
She said the advantage of working through banks is that there is some risk assessment.
“There are limits to what the government can do, there is limit to finances available to it. This can be seen from Moody’s downgrade (of India’s rating). In any case, our debt is on the higher side. We have to use our money very very carefully,” she said.
If used in firms that are unviable, it would be wasted in the long run, she said, adding that channelising it through banks would facilitate risk assessment.
As it is fiscal deficit is going to hit above ten per cent of the country’s gross domestic product (GDP), she reminded.
She asked industry to come forward with their suggestions to the government. “The government is listening. There is scope for packages to be fine tuned. The government is there to help. Industry has to stand up and come forward," she urged India Inc.
She contested the views about slow down of the economy even before the outbreak of coronavirus. She said the economy was slowing down because of the crisis in non-banking financial companies (NBFCs) which was being addressed that time and continued to be addressed in the Rs 20-trillion packages.
She said high frequency indicators showed that there was a turnaround in February.
“Even exports have risen. But in march, Covid hit. There was turnaround because of the number of packages for the NBFCs,” she said.
Among high frequency indicators, the index of industrial production (IIP) grew by a seven-month high of 4.6 per cent in February before shrinking by 18.3 per cent in March and the record 55.5 per cent in April. Similarly, exports bucked the six –month declining spree by rising by modest 2.91 per cent in February. However, these contracted by 34.57 per cent in March and then the multi-year low of 60.28 per cent in April.
Banks had liquidity but they were not lending and were parking in the reverse repo window.
But, that can be lent now under the credit guarantee scheme because non-performing assets are not going to increase in the future as the government is going to give credit guarantee, she said.
She said Industry is waiting for the demand to rise before taking loans and as this happens, liquidity created by RBI’s measures would be used.
Goyal said economic loss due to Covid-19 would be temporary real shock. She quoted studies to buttress her view point that the recovery will be very sharp from the real shock if the human capital is maintained.