Historically, the world seems to have grappled with an epidemic or a pandemic after every few decades. But what differentiates the ongoing Covid-19 scenario is its scale in terms of the proportion of population infected and the loss of global output. Multilateral agencies have estimated the world to incur a loss of $5-$10 trillion due to it. Every country, thus, has devised its own way to deal with the situation. India has brought forward an economic stimulus under the eye catching name of “Atmanirbhar Bharat Abhiyan”
The ₹21 lakh crore package promises to inject liquidity equivalent to 10% of the nominal GDP. For a country with the entire central government budget of ₹30 lakh crore and estimated borrowing of ₹12 lakh crore, this sure looks promising. The pandemic didn’t break the system but exposed its vulnerabilities and this package looks to be a right step in closing the gaps by making the country self reliant in all spheres. The most effected strata of the society – farmers, labourers and BPL families – have been taken care of at the earliest. The Pradhan Mantri Garib Kalyan Yojana ensured free ration and cash transfer to the beneficiaries and upfront cash payment to PM-KISAN eligible farmers. Additional funds of around 2/3rd of the actual budgetary allocation were sanctioned under MGNERGS and daily wage was hiked to give more money in the hands of rural poor. Besides, PF withdrawals and loan moratoriums assisted them in tackling with cash shortage.
But not everything that glitters is gold. On a deeper analysis, it won’t be hard for one to realise that out of the ₹21 trillion package, government’s actual cash expenditure will be just ₹2-3 trillion. It isn’t really surprising, considering the ways in which schemes designed are intended to work. Frankly, the stimulus is nothing but a ‘Mega Loans Scheme’ where everyone from corporate to street vendors has been given the opportunity to get loans at convenient terms. Moreover, the stimulus absolutely deserves to be termed as second budget of the year, given the kind of reforms mentioned in it. From farms to space, every sector finds itself in the package. It is conspicuously incomprehensible to a common man how investments in defence and space sector would help uplift the economy in near term which may be looking at its gloomiest growth outlook in centuries. The FDI liberalisation in minerals and atomic energy sectors could have waited till the next general budget, while tourism, hotel and hospitality industries which undoubtedly have been worst hit and deserved real stimulus failed to receive even a mention in the package.
While it’s disappointing to see already running schemes and monetary operations by RBI forming the most part of the package, it’s also good to see how the Executive tried to maintain a balance between economic stimulus and fiscal discipline. How the package performs will only be seen after the crisis subsides, but these desperate measures necessitated by such desperate times will prove to be stepping stones of a ‘Self Reliant India’ in the making.
Comments