Will tourism sops be helpful? Sure, to the extent that folks need credit score: Madan Sabnavis, CARE Rankings

Madan Sabnavis, chief economist, analyzes the aid measures of the FM for tourism. Edited excerpts from his interview with ET Now:

ET Now: What do you think of the FM’s? stimulus Measures for Tourism sector? Can tourism make a comeback in times of social distancing?

Madan-Sabnavis: Sops for tourism probably won’t make a lot of sense at a time like this. But to be fair to the finance minister, she made it clear that these were relief measures and not incentives.

Many people expected some kind of suggestion, but personally I didn’t. From the government’s testimony last year, I think the government only provides an enabling environment; there is not too much money out there. It doesn’t really settle for some big bang issues.

There are two questions that need to be asked. The first is, will these measures be useful? The answer is yes, provided that people want credit. There is demand in certain pockets so getting some form of loan guarantee from the government will certainly come in handy.

Now I feel like there aren’t too many sectors that are in demand. As for adding another Rs 1.5 lakh crore to the loan guarantee program, I really don’t know if there will be enough appetite.

The middle class is aware that nobody wants to get into debt if there is no demand. The certain part is natural in terms of relief. I think it was the government’s preferred way of providing more relief to the poorer parts. That is probably a sign of a progressive mood.

This overall package also includes a third part with a view to medium to long-term reforms. They may not really be needed at this point, but yes, to the extent that they start working after two to three years, I think it could probably help.

Will all of this help stimulate growth this year? The answer is, probably not.

The people are beaten; giving them credit easily may not be the answer. What is your opinion?

Giving credit is not a solution. So many sectors are affected, so why just tourism? Is it actually practical for the government to give Rs 1 lakh to everyone in these companies?

It may be possible for the state to give Rs 1 lakh, but is that practical? We actually had the opportunity to make such money transfers last year, but the government decided against it – for whatever reason, it may be ideological. Hence, it is probably not possible to expect this just for the tourism sector now.

There are other more important things to do. Much ado is made that Europe did not include India’s Covishield in its green pass rules. But in India, even a person with a full blast is not allowed to travel to every part of the country – to visit certain parts they need an RT-PCR.

I think we need to get our own house in order first before we ask for international acceptance from Covishield.