Answer To Crisis Is To Put Money In Hands Of People: Chidambaram On Govt Package

Mumbai: A day after Finance Minister Nirmala Sitharaman announced a package to support the pandemic-hit economy, senior Congress leader P Chidambaram on Tuesday said the answer to this “crisis” is to spur demand by putting money in the hands of the people, especially the poor and the lower middle classes.

Also Read: Govt Announces 8 COVID-19 Relief Measures Including 4 New Measures

Sitharaman on Monday announced an additional Rs 1.5 lakh crore loan for small and medium businesses, more funds for the health sector, loans to tourism agencies and guides and visa fee waiver for foreign tourists. Economy

Responding to the development, Chidambaram said, “Some primary truths: Credit guarantee is not credit. Credit is more debt. No banker will lend to a debt-ridden business.”

Also Read: New Measures Will Help Stimulate Economic Activities, Generate Employment: PM Modi

In a series of tweets, the former finance minister said, businesses burdened with debt or short of cash do not want more loans, they need non-debt capital.

https://twitter.com/PChidambaram_IN/status/1409730641353138182?s=20

“More supply does not mean more demand (consumption). On the contrary, more demand (consumption) will trigger more supply,” he said.

Demand will not grow in an economy where jobs have been lost and incomes or wages have been reduced, Chidambaram argued.

“The answer to this crisis is to put money in the hands of the people, especially the poor and lower-middle classes,” he said.

https://twitter.com/PChidambaram_IN/status/1409730645702721539?s=20

The Congress had on Monday claimed that the measures announced by the Finance Minister “delivered nothing but headlines” and said the government should take steps to spur demand to revive the economy “which continues to be in the doldrums”.

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