No plan to print currency notes: FM Sitharaman
Finance minister Nirmala Sitharaman on Monday told Parliament that the government has no plan to print more currency notes to tide over the economic crisis caused by the Covid-19 pandemic.
Replying to a question, “whether there is any plan to print currency to tide over the crisis”, the finance minister said: “No Sir”.
Many economists and experts have suggested that the government spend aggressively to revive the economy from the devastating impact of Covid-19. For that, it must either borrow money or print more currency notes.
Even former finance minister P Chidambaram had on June 1 urged the Union government to borrow money or print banknotes without worrying about the fiscal deficit, a day after India’s gross domestic product was reported to have shrunk by 7.3% in 2020-21.
“This is not the time to worry about the fiscal deficit. So what if the deficit widens to 6.5%? We can’t lose another year like we lost the last year. But the way the government is reacting, we are going to lose another year. My advice to the government is to act boldly and spend. Borrow or print money and spend,” Chidambaram had said at a virtual press conference.
While answering the question on Monday, Sitharaman said the contraction in GDP during FY-21 “reflects the unparalleled effect of the Covid-19 pandemic” but added the government has done enough to offset it.
“The fundamentals of the economy remain strong as gradual scaling back of lockdowns, along with the astute support of Atmanirbhar Bharat Mission has placed the economy firmly on the path of recovery from the second half of FY 2020-21,” she said.
As the pandemic began, India imposed a 68-day national lockdown from March 25, 2020, which saw the economy plunging into technical recession (negative growth for two subsequent quarters). This led to a 24.4% contraction of the economy in the first quarter, and 7.3% contraction in the second quarter of 2020-21.
However, the ₹29.87 lakh crore economic stimulus-cum-relief package between March 26 and May 17 last year, known as Aatmanirbhar Bharat Abhiyan 1.0 (Self-reliant India Initiative), led to a V-shaped recovery, the government claimed. The economy expanded by 0.5% in the third quarter and 1.6% in the fourth quarter that ended on March 31.
Sitharaman expressed confidence that the government’s policy measures would accelerate GDP growth. “The Union Budget 2021-22 has announced a number of measures to support broad-based and inclusive economic development, including a 34.5% increase in capital expenditure and 137% increase in health expenditure. The government announced a relief package of ₹6.29 lakh crore in June 2021 to strengthen public health and provide the impetus for growth and employment measures.”
On Monday, Sitharaman also tabled a notification in both houses of Parliament, reducing total customs duty on masur dal from 30% to 10% to provide relief to the consumers. A finance ministry spokesperson said the government has reduced basic customs duty on it from 10% to nil, and the agriculture infrastructure development cess from 20% to 10%.
The finance minister on Monday also introduced the Insolvency and Bankruptcy Code (Amendment) Bill, 2021, in the Lok Sabha to amend the insolvency law and provide for a pre-packaged resolution process for stressed micro, small and medium enterprises. It will replace the ordinance that was promulgated on April 4. The law facilitates consensual resolution of cases between corporate debtors and lenders. The government on Monday also passed the Factoring Regulation (Amendment) Bill, 2020, in the Lok Sabha amid uproar by the Opposition members over the Pegasus row and farmers issue.