Don't Need Budget 2.0, Post-Covid Reforms Can Be Through Stimulus: CEA K Subramanian

Chief Economic Adviser K Subramanian on Wednesday batted for India's diversified business portfolio and abundance of labour. He said India provides a great opportunity for large firms to invest in.

"I am for assemble in India given the labour force that we have. Now the conditions for that look all the more favourable. India provides a diversified business portfolio. Larger firms had concentrated businesses which they now may be regretting," he said in an interview with CNN-News18.

On being asked whether India needs a second budget after coronavirus, he said policy making in India happens throughout the year. Coming up with a separate budget may be a legal way to go about it, but economic reforms post coronavirus may be provided via a stimulus package as well.

"Germany just came up with a new budget and almost every country is having to do it. Projections that we made at the start of the year, for every country, they've had to be revisited and recalibrated. Speaking specifically of India, while Budget is one key window into policy making, policy making happens in India across the year," he said.

News18 had earlier reported about how some of India's top economists supported the idea of a second budget.

Subramanian said, "Whether or not there is another budget that would be required or measures can be taken outside the budget, if I look at it in terms of spirit, it is a legal ease. From an economic perspective, I think we've just got to do what we've got to do whether it means having the legal means of a separate budget or through stimulus measures. From my perspective, I would rather focus on the economy and as I said policy making in India does happen outside the budget season as well."

Meanwhile, micro, small and medium enterprises (MSMEs) have been passing through a hard time due to the COVID-19 pandemic since an extended nationwide lockdown has meant units have been shut for more than a month. This has meant severe shortage of working capital, labour and livelihoods.

The Centre has been talking of devising a package to mitigate the troubles.

"The package on MSMEs is being worked on and should be coming out any time soon. What we recognise is that this particular episode is a shock on the demand side that may in turn have some supply side shock as well if there are liquidity concerns that small and medium enterprises face, which they are. So we are working on providing them significant liquidity and thereby, taking care of their cash flow needs," said the chief economic adviser.

Several industry bodies have urged the government to create liquidity by clearing dues from government departments, public sector undertakings, as well as income-tax and GST refunds.

The government is also set to redefine MSMEs based on their annual revenue, replacing the definition that relied on self-declared investment on plant and machinery. This is aimed at aligning them better with the GST regime and encouraging ease of doing business.