Government to push reforms in sectors with stimulus

NEW DELHI: Wiser from the 2008 experience, the government is looking at pushing reforms in sectors that will be getting the much-anticipated stimulus as part of a strategy to ensure that the funds are not squandered.

So proposals from ministries, ranging from food processing and power to commerce, are being studied closely by the finance ministry, which will announce the package over the next few days. The idea is to ensure that ministries and departments do not simply push proposals that come from industry lobby groups but also innovate to ensure that the sector benefits in the long-run and does not strain the exchequer.

So, a support for distribution companies, that the power ministry is hoping to be part of the latest set of measures, will need to be accompanied by a framework where only those who deserve subsidies should get it, while dues of discoms as well as coal companies are cleared. Similarly, in other sectors, several schemes will be tweaked to ensure that they become more efficient and the beneficiaries can scale up when the opportunity arises in the coming months.


“There has to be a sound fiscal management, which serves the overall economic purpose. The crisis will be used as an opportunity to undertake several crucial steps to improve performance and efficiency,” an official said, pointing to the latest round of excise duty hike. The rationale of allowing oil companies to hold prices steady for nearly 45 days was to ensure that their inventory losses are covered, a part of which was made up through aggressive purchase and storage of crude oil at $19-21 a barrel, taking advantage of the low international prices. And, just when infrastructure ministries, led by road and highways were getting worried about the lack of funds in the Central Road and Infrastructure Fund, the government raised the duty on Wednesday to mop up Rs 1.6 lakh crore, which would otherwise have been pocketed by oil companies.

Government officials said while preparing the stimulus, with measures meant for MSMEs and poor finalised on Saturday, the Narendra Modi administration was conscious of the fact that the UPA’s packages, announced by then finance minister Pranab Mukherjee in 2008 had resulted in massive inflationary impact and a huge pile of bad debt, which took years to clean up. As a result, there have been multiple discussions at the PM level to ensure there are “no free parties”.

In any case, the general perception in the government is that vocal sections in the corporate sector are using the crisis caused by the coronavirus to push their demands for a stimulus.