E-Conclave: Govt has done nothing to provide assistance to states, says economist Montek Singh Ahluwalia

The government has done “nothing” to provide assistance to states, said the former head of the erstwhile Planning Commission and noted economist Dr Montek Singh Ahluwalia.

Speaking to India Today TV News Director Rahul Kanwal during a session of the India Today e-Conclave Jumpstart India series, he said, “To my knowledge, the government has done nothing to provide assistance to the states in order to meet this problem.”

“So, that’s one issue that I think they (Centre) need to take into account.”

Ahluwalia further added that there is another worrisome issue the government has to recognise.

“The government has to recognise that the fiscal deficit that was in the budget is simply not going to be achieved,” he said.

He reiterated that more than a stimulus, the government needs to figure out a way to reduce the period of lockdown.

“It’s (stimulus) not gonna solve the problem, so you need to have a reduction in the lockdown as quickly and reasonably as possible, combined with measures that would provide the economy,” Montek Singh Ahluwalia said.

When asked whether it is fair to compare India’s stimulus package with other economies around the globe, he said it is justified to seek an estimate of what India is going to do to tackle the crisis.

He warned that revenue may further dry up after the lockdown as the government’s divestment plans may not go through in an ailing economic climate. However, he added that the government’s expenditure could go up.

Besides that, Dr Ahluwalia said that there is not enough information at the moment to predict whether there would be a sharp recovery after the lockdown.

He again stressed on the lockdown easing strategy. But at the same time he said the government needs to have adequate health infrastructure in place to ensure that the situation is controlled if infections spike after easing the lockdown.

But Ahluwalia was sure that India’s GDP in the first quarter would witness a large contraction. “When I say negative, I mean substantial,” he said.