Chief Economic Adviser K Subramanian on Wednesday said that the economic fortune of the country is linked directly to the ongoing pandemic and the resultant restrictions imposed to curb its spread have impacted employment in India, like it has affected all the countries across the world.
Speaking to NDTV, Mr Subramanian said that the government is trying to spend more on key sectors like construction, as it helps in employment generation.
Responding to a range of questions, the chief economic adviser while replying to a query on whether the economy can face the impact of a possible third wave of the pandemic, he said, “as I was mentioning, not only in India, but in the entire world, the economic fortunes have been linked with the pandemic itself.”
When asked whether unemployment linked to Covid is one of the major socio-economic concerns, he said, “the restrictions (on movement of people) do have their impact. The world over there has been an impact on employment generation and India is not an exception. Therefore, the government has taken steps, especially on capital spending on construction and that is why it increased by 15 per cent in the fourth quarter of 2020-21. It is an important sector which creates jobs for urban poor.”
Sharing a positive perspective on the issue, Mr Subramanian said, “one redeeming feature is that impact of the second wave has not been felt as much as the first wave, as countries have learnt to live with the pandemic. The second thing is the pace of vaccination itself. Evidence suggests that even the first dose itself seems to matter a lot in providing protection. Apart from a few exceptions where people have been infected despite taking both the doses, on an aggregate, the vaccination has provided protection. Its pace has to be accelerated in order to face the third wave.”
Reacting to a question on whether economy will recover if India is able to curb the Coronavirus infection, the chief economic adviser noted, “if we look at the way the economy has performed in the last one year, after the first quarter decline (of 2020-21) we had predicted that economy should recover and it did recover in the third and the fourth quarters. After three quarters decline, the consumption increased by 2.7 per cent, investment by 10.8 per cent and construction by 15 per cent.”
He added further that “the second wave has been devastating, but just like its rise was deep, even the decline (in cases during the past few days) has been steep and once the second wave eases, we expect that economic activities will come back. The momentum was there in March, 2021 and once the second wave is gone, the recovery will happen”.
With industry bodies suggesting that one per cent GDP should be spent on direct benefit transfer for poor, as this would help address unemployment, Mr Subramanian said, “in the last one year we have seen that MGNREGA demand was significant. But in May this year however, the demand in it was not as high as last year. But it can go up along with spending on infrastructure, and we are considering some additional measures too.”
Elaborating on the government's vaccination programme, which he said can significantly help over the spread of the infection, Mr Subramanian said, “peak vaccination achieved in Indi was 40 lakhs a day. One crore per day is two and a half times more than that. If we do it possibly on a 24x7 basis, then it is possible to vaccinate one crore persons a day and that's the target we should be aiming at.”
He further informed that though Rs 35,000 crore have been provided in the Union Budget for vaccination, the Finance Minister has said that additional funds will be given for additional doses.
Fear of the pandemic had reduced last year when the number of positive cases had come down significantly and similarly it should happen this year too as greater vaccination will help open the economy, Mr Subramanian observed.
Responding to a point that if there is a variety of choices available in terms of vaccines, then it will create an opportunity to finance two billion doses to vaccinate more people by December 2021, the chief economic adviser said, “even with a two-dose vaccine, the first dose has an impact. Once the fear of the pandemic got reduced after first wave, economic activities had picked up. Whatever we can do to vaccinate more people, the cost of that will not be as high compared to the benefit which we will get from the economic activities coming back to normal.”
On being asked about the actual cost which may be incurred on vaccinating all adults in India, the chief economic adviser did not reveal an actual figure but said that it would depend on how the vaccination programme will pan out.
As both public as well as private sectors along with the states are participating in the vaccination programme, therefore the actual cost is not known as of now, Mr Subramanian informed.
On being specifically asked about the cost if only Centre's participation in the vaccination programme is taken into account, Mr Subramanian said, “the benefits of vaccination which we will get are far higher than the costs.”