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The next tax boost may come after the Covid-19 vaccine: CEA

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NEW DELHI: The government may prefer to provide a fiscal boost once uncertainty about the Covid-19 pandemic subsides with the arrival of a vaccine, chief economic adviser Krishnamurthy Subramanian said Wednesday, stressing the importance of countercyclical policies. .
“I am going to emphasize again that the government is willing to do what is necessary in terms of public spending, but the timing of this is extremely important. Now that there is news that the vaccine may not be far behind, once we have the vaccine, the uncertainty that people have will decrease significantly. And until we have the uncertainty, even if people have money in their pockets, they can actually decide to keep it in their banks as savings accounts, and that’s what I meant about increasing PMJDY (Jan Dhan) accounts by around Rs 20,000 Rs million, ”Subramanian said at a webinar organized by Ficci.
“The question is not if, the question is when, and I think the correct point would be that if the vaccine arrives in the next few months and therefore uncertainty decreases, I think it would be the right time for a fiscal boost that will generate demand even for discretionary items… countercyclical fiscal policy is important, but timing is just as important in ensuring that the return on money is maximized, ”said Subramanian, responding to the need for a fiscal boost to help drive growth The government has put forward a series of measures and reforms to overcome the devastating impact of the pandemic.
But in recent weeks, there have been demands for yet another fiscal boost to boost economic activity. Prime Minister Narendra Modi’s top economic advisers have proposed an investment-driven stimulus to help revive the economy. Finance Minister Nirmala Sitharaman also said the government is ready to take further steps in the future to revive growth.
Subramanian said the non-performing asset problem was holding back the banking sector and called for the use of financial technology to improve the quality of loans. “We cannot become the third largest economy with the health of the banking system we have,” said Subramanian.

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