FICCI welcomes Rs 1 lakh crore demand boost to the economy ahead of festive season
NEW DELHI, 12 October 2020: Commenting on the set of announcements made by the Finance Minister to boost demand in the economy, Dr Sangita Reddy, President, FICCI said, “Our government has delivered in a very innovative and fiscally prudent way to boost demand in the economy. The set of measures announced today for supporting consumption and investment demand would energize growth over the remaining part of the year. The overall impact of these measures will be to the tune of Rs 1 lakh crore and this is sizable.”
“FICCI had earlier suggested that the usage of ‘consumption vouchers’ as a public policy tool will be an effective measure to prop up demand in the economy. By leveraging on the LTC component of the salaries and which would not have been availed off in most cases given the COVID situation, the government had provided a strong incentive for people to advance their purchase decisions over the next six months. Equally important are the announcements related to additional capital expenditure both at the centre and state level. The timing of these announcements is just right as we are entering the festival season, and this should help improve consumer sentiment and demand in the economy. These announcements also give us additional reasons to review the GDP growth forecast for the full year and we hope to be back in the positive growth terrain by the last quarter of this fiscal,” Dr Reddy added.
While on the consumption side we expect the overall impact to be around Rs 36,000 crore from the incentive scheme designed for government employees, another Rs 28,000 crore could potentially come from the private sector as similar schemes get implemented. With the additional outlay for investments being to the tune of Rs 37,000 crore, the overall potential boost will be of the order of Rs 1 lakh crore.