PM Modi made an announcement of Rs. 20 lakh crore relief package to revive the economy. The Indian economy was already going through a bad phase when the Coronavirus pandemic hit the country which further deteriorated the economic condition.
It is essential to analyse whether this seemingly huge relief package will be able to revive the economy or is it just like so many other Jumlas of the BJP government. First of all, Government of India has just borrowed billions of Dollars from the World Bank and the International Monetary Fund. It has dipped into the reserves of the Reserve Bank of India. It has defaulted on paying states their share of the Goods and Service Tax collected by the Centre. And the Government didn’t have enough money last month or this month to arrange for the return of the stranded migrant workers in different parts of the country or feed them.
Secondly, the Prime Minister had to float a new Trust, PM CARES, and appeal for generous donations. Employees and corporate bodies were arm twisted to donate. And public sector units defaulting on wage payments and private sector industry engaging in wage cuts also donated generously. Even school teachers and doctors were forced to donate a day’s salary to the cause.
The opposition has slammed the centre’s announcement on the first tranche of Rs 20 lakh crore COVID-19 economic stimulus package on Wednesday as a “disappointment” and a “big zero” that has “nothing” for migrant workers, even as the BJP hailed it.
Congress leader P Chidambaram hit out at the government soon after Ms Sitharaman unveiled the first set of incentives. He said that except for the modest MSME package, we are disappointed with today’s announcements.
Chidambaram said he would count every additional rupee the government infuses into the economy and examine what the poor, hungry and devastated migrant workers get after walking hundreds of kilometres to their home states. “Yesterday, PM gave us a headline and a blank page. Naturally, my reaction was a blank. Today, we look forward to the FM filling the blank page”.
There was no explanation given for why the announcements couldn’t be made in one day, or why we would have to wait until the very last announcement to get an accounting of how the government will be funding a Rs 20 lakh crore package.
After two days of announcements from the finance minister, it seems clear that the Rs 20 lakh crore number is essentially meaningless, a bit of rhetoric and mathematical wordplay.
The number includes liquidity announcements already made by the independent Reserve Bank of India that alone accounts for nearly half of the Rs 20 lakh crore package that Modi referred to.
Whether the MSME sector would indeed benefit from the relief package and the migrant labourers would also be fed to a large extent remains to be seen during implementation and it would depend on the method of expenditure of this amount, whether it is able to revive falling Indian economy or not.