Ab ki baar, Atmanirbhar: Modi’s mega package is an economic masterstroke

Chennai: Pandemics, in the past, were notorious for taking away lives. But, coronavirus,
or Covid-19, has snatched away livelihood too. With the global economy suffering from an unprecedented crisis, India, which is under lockdown from the last week of March, is no exception.

The government had to fight a twin battle of safeguarding lives and livelihoods, and it has been striking a fine balance right from the beginning. Soon after Prime Minister Narendra Modi announced lockdown, Finance Minister Nirmala Sitharaman unveiled a package under Pradhan Mantri Garib Kalyan Yojana (PMGKY) that listed out relief measures for people from various walks of the society. Reserve Bank of India Governor Shaktikanta Das then came out with steps to ease fiscal burdens.

Since then, activities to rebuild, reinvigorate and rejuvenate economy have been a continuous process. But, as they say “the best is reserved for the last”, the masterstroke arrived when Modi unveiled Rs 20 lakh crore economic stimulus package and laid out vision for an “Atmanirbhar Bharat” (Self-reliant India).

What followed were five-part announcements by Nirmala Sitharaman, that covered almost everyone- from farmers to traders to labourers to salaried employees to micro, small and medium entrepreneurs to corporates.

When the government’s critics were looking for a package equalling to four or five per cent of the country’s gross domestic product, Modi’s pledge of total spending of Rs 20 lakh crore (USD 265 billion) to weather the fallout of the coronavirus pandemic under “Atma-nirbhar Bharat Abhiyan” was about 10 per cent of India’s GDP in 2019-20 and was very competitive when compared to stimulus provided by even the so-called developed countries. This googly of
goodies was not just unexpected, but also unprecedented.

As part of the Rs 1.70 lakh crore PMGKY package, the government announced distribution of free food grains, cash payment to women Jan Dhan account holders, poor senior citizens and farmers etc. Around 41 crore people received financial assistance of Rs 52,608 crore under the PMGKY, that used technology to do Direct Benefit Transfer (DBT) to people. LPG cylinders are being given free of cost for three months.

In addition, 84 lakh metric tonnes of food grains and more than 3.5 lakh metric tonnes of pulses were distributed to States, despite logistical challenges. While the additional sum of Rs 40,000 crore allocated to Mahatma Gandhi Employment Guarantee Scheme will help in creating sustainable livelihood assets, which will give a boost to the rural economy and infrastructure, the decision by the government to increase public expenditure on healthcare and investment in grass-root health institutions like health and wellness centres will help prepare India for any future pandemic.

Credit line to small businesses and new fund creations will support the industries, especially the MSMEs, while the bank loan moratorium (from initial three months, it has now been extended to six months), payment of provident fund by the government and reduction of key rates will help both employers and employees.

Farmers, besides getting financial assistance and loan, will now also be able to sell their produce without any barriers and for right price. More companies are being brought under MSME bracket. Financial help has been announced to roadside vendors, milk producers, retailers, realtors etc. Rules are being rewritten and laws are being amended- all with a single vision of Atmanirbhar Bharat.

Several measures have been announced to lift the sagging demand in the economy and the package has guaranteed the survival of existing production capacities besides laying strong grounds for enhancing larger private sector participation.

As the Finance Minister pointed out, the size of the stimulus at Rs 20.97 trillion, totaled more than the promise made by the Prime Minister in his address on 12 May. This is more than 10 per cent of the GDP and compares very favourably with packages announced by other emerging economies. Thus, India could succeed in better managing the Covid crisis than many other
advanced economies, both in terms of lives and livelihood.

(The writer of this article Shankar P is a Financial Consultant.)