No plan to print currency notes, says FM

Nirmala Sitharaman

New Delhi: The government has no plan to print currency notes to tide over the current economic crisis triggered by the outbreak of Covid-19 pandemic, Finance Minister Nirmala Sitharaman informed Parliament on Monday.

To a question on 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 the government to resort to printing more currency notes to support the economy ravaged by the spread of Covid-19, and protect jobs.

India’s real Gross Domestic Product (GDP) is estimated to have contracted by 7.3 per cent during 2020-21, Sitharaman said in a written reply to Lok Sabha.

This contraction reflects the unparalleled effect of the pandemic and the containment measures that were taken to control the pandemic, she said.

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. The government had announced a special economic and comprehensive package of Rs 29.87 lakh crore under AtmaNirbhar Bharat (ANB) to combat the impact of the pandemic, to revive economic growth and to bolster employment during 2020-21, she said.

Meanwhile, the country’s gross domestic product (GDP) growth is likely to be 8.8 to 9 per cent in the current financial year, driven by agriculture and industry sectors, Care Ratings said in a report. The country’s economy had contracted by 7.3 per cent in fiscal 2020-21.

The agency said the outlook for the Indian economy on almost all counts in FY22 would look seemingly better than FY21 on account of the negative base effect. “GDP growth for the year (FY22) is expected to be 8.8-9 per cent with GVA (gross value added) growth of 7.8 per cent. The main drivers of the economy would be agriculture and industry,” the ratings agency said in its Economic Outlook for 2021-22. Services sector will not be able to reach its potential even at 8.2 per cent growth as the second lockdown has affected sectors like hotels and restaurants, tourism, retail malls and entertainment in particular, it said.

While a lot has been done on the supply side by both the RBI and the government, the malaise is on the demand side which has been a problem even before the pandemic, Care Ratings pointed out. A critical factor this time will be the spending pattern of the rural households, the report said, adding that the monsoon forecast is good and ideally a stable Kharif harvest should bode well for rural incomes.

 

NT Bureau