DECODING THE ECONOMIC STIMULUS
IT is often said that one should never waste a good crisis, since every crisis also offers an opportunity for a creative response. For the government, the COVID-19 pandemic, disastrous as it may be, has also presented an opportunity to implement some bold economic reforms. And Prime Minister Narendra Modi did seem to grab that opportunity on the 49th day of the nationwide lock-down. But the question remains: will the Rs 20 lakh crore stimulus put India back on a growth and development trajectory, or will the prime minister’s ‘Aatma Nirbhar Bharat’ pitch, of taking India towards a robust self-reliance, prove to be rose-tinted optimism?
On May 12, the prime minister announced a stimulus package of Rs 20 lakh crore, which had two key objectives—to provide immediate succour to individuals and firms impacted by the lockdown, and to prepare Indian companies, specifically those in the micro, small and medium enterprises (MSME) sector, to take advantage of new manufacturing opportunities in the post-pandemic world. The prime minister said that the stimulus package amounted to 10 per cent of India’s Rs 200 lakh crore economy, but admitted that it included recent monetary measures taken by the Reserve Bank of India (RBI) to improve liquidity. “This package will give a new impetus to the development journey of the country in 2020, and a new direction to the self-reliant India campaign,” Modi said in his fifth address to the nation since the lockdown was first announced. At roughly $266 billion—on paper—India’s stimulus package is one of the largest in the world after the US’s (13 per cent of its GDP) and Japan’s (21 per cent of its GDP).
While the prime minister
