PM Modi, while addressing the nation on 12th May, informed about another fiscal stimulus in the time of lockdown. 20 lakh crore package to boost the economy announced by PM Modi.
20 Lakh Crore Package
The Prime Minister announced an economic package of Rs 20 lakh crore, which is almost 10 per cent of India’s GDP. This will help the nation to become self-reliant. The package will focus on land, labour, liquidity and laws. Further, he said that India would stand on the five pillars of Economy, Infrastructure, Systems, Demography, and Demand to become self-reliant.
Biggest Economic Package in the World
The economic package introduced is the world’s largest package after the USA and Japan, which is 13% and 21% of their GDPs. It will cater to the needs of various sections of the society, including the cottage industry, MSMEs, labourers, middle class, and industries. Though he did not reveal details of the package, he hinted towards tax relief for small, micro and medium enterprises. Besides, he indicated some incentives to boost domestic manufacturing as well as attracting investments. Moreover, proposals of giving full tax exemptions to companies making a new investment of a minimum threshold in sectors of medical devices, electronics, telecom equipment, and capital goods are under consideration.
20 Lakh Crore Package- 10% of India’s GDP
The total economic package, including what was announced in April is equivalent to around 10% of the country’s GDP. Besides, the stimulus value in dollar terms is higher than the GDP of 149 countries such as Vietnam, Portugal, Greece, New Zealand, and Romania. Also, it almost equals Pakistan’s annual GDP of USD 284 billion.
As per the Bloomberg Billionaires Index, the package is five times more than the personal wealth of Mukesh Ambani. Not only this, but it is also 1.8 times bigger than the fortunes of 10 wealthiest Indians, which is currently USD 147 billion. That apart, it is worth double the value of Reliance Industries, which is India’s most valued firm. Along with this, it is ten times India’s divestment target of Rs 2.1 lakh crore for FY21. Moreover, the Rs 20,00,000 crore stimulus almost equals to 17% of the BSE.
Boost for Indian Economy
Sanjeev Sanyal, Principal Economic Adviser, Ministry of Finance said that the package would help the Indian economy reset. It is bigger than expectations and will have some degree of credit guarantees. Further, he said that it would lead to a re-examination of everything, whether APMC or labour laws. Mentioning the importance of SMEs, he said that the financial system has not been providing SMEs with adequate liquidity. Besides, he said that the demand in economies around the world is in a shock and we need to respond positively. Also, self-reliance will protect some parts of the country’s domestic supply chains.
Mission for Self-Reliant India
Calling it ‘Atmanirbhar Bharat Abhiyan’, Modi stressed on the importance of promoting the local products. Further, he said that the country should see the crisis as an opportunity to become self-reliant. Further, Modi encouraged the nationals to be vocal about the local products. Also, he hinted towards extending the lockdown. However, he revealed that lockdown 4.0 would be completely different, and the measures taken in the earlier version may not be required further.
The package introduced is not entirely new as it includes earlier announcements of the government and the RBI. In all, the RBI contributed around 5 to 6 lakh crores to the package, Add to this 1.7 lakh crore of the first package, the total amount makes 40% of 20 lakh crores. This leaves just 12 lakh crore. Moreover, if the government includes RBI’s liquidity decisions, the sufficient amount will fall even more.
Opposition Say No Action Only Talk
Former Union Minister Jairam Ramesh created an acronym- ‘No Action, Messaging only’ after Modi announced the fiscal package. Besides, several congress leaders took a dig at Modi over social media. Mr Chidambaram tweeted that the announcements made look like a headline on a blank page. Now, he waited for the finance minister to fill that blank page.
Another Congress spokesperson Jaiveer Shergill compared the government’s decision with the pre-2014 election promises of bringing back the black money from abroad and depositing around 15 lakh in everybody’s accounts. Further, he said that BJP is an expert in showing stars in broad daylight.
In all, the government’s package is an attempt to revive the economy post the crisis.