Imperative that govt brings the economy back on track

Finance Minister Nirmala Sitharaman’s announcements Thursday had nothing to do with industry or business, but for the poor and marginalized sections of society. These are welcome and very commendable proposals. They were necessary because the economically weakest section (SAP) is vulnerable and would certainly be worried about the current economic situation.

I think the next round of government announcements will be for industries. The government may not have the budgetary muscle to spend more money, but it must do so by abandoning the objective of a budget deficit. At times like these, even if the budget deficit increases, no one will question it. On the contrary, they will be welcome. It is imperative that the government get the economy back on track.

The next big problem that should arise is that of monthly payments (NDEs) and interest leave. If people don’t win, how will they pay? We have to see if there is interest leave or EMI leave, because these are some of the main concerns of many people as well as businesses. Next are the sectoral measures for travel, tourism, airlines and airports that were severely affected as a result of the 21-day shutdown following the coronavirus epidemic (Covid-19).

Markets have fallen sharply from their recent peak levels and have hit the downside twice in 10 days. However, they have been in recovery mode for the past two sessions. The depth of the market is very small. Inventories rose on expectations of the sops. However, once you see the upside, there are not many sellers left because most of them have already sold. That said, that doesn’t mean the market has bottomed out. Unless we see the Covid-19 business in India as well as on the world front collapsing, nothing could be said on the road to markets for with firm conviction. If there is an outbreak of virus cases, we will return to square one and the markets will once again be on a downtrend. These 21 days are therefore very crucial for all of us and we must take the lock very seriously.

Ambareesh Baliga is an independent market expert. The opinions expressed are his.

(As told to Swati Verma)

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