FM’s announcements: Demand has to convert into purchases

At this point in time, a large spend would probably outweigh the need for fiscal prudence, says Saugata Bhattacharya, Chief Economist, Axis Bank.

How far would FM’s announcements go towards revving up consumption and get people back to the markets to buy ahead of the festive season.
Well to begin with, something rather than nothing is a good thing. But the numbers that are coming out are basically excel numbers. You do not really know how much of some of that demand gets converted to actual purchases. We need to wait and watch.

I am now increasingly of the view that the government actually needs to spend. We may have much lower per capita income than in the developed markets, but as of this point in time, demand looks to be a fairly serious problem. I am just hoping that the capex measures, the loans to state, etc, that have been proposed are actually pushed through and projects started, so that some of the money that is being proposed for the state governments and non-government capex programmes, begins to trickle down into the hands of people.


At this point in time, a large spend would probably outweigh the need for fiscal prudence. However, I do appreciate the need for such prudence and so a partnership with RBI to support the government’s larger borrowing to spend is probably needed at this point.