Prime Minister Narendra Modi announced a special economic package worth Rs 20 lakh crore for business and workers. The sum includes Reserve Bank of India’s (RBI) liquidation worth close to Rs 8.04 lakh crore along with Rs 1.17 lakh crore relief package under ‘Gareeb Kalyan Yojana’ spelled out by Finance Minister Nirmala Sitharaman last month. Combining all the relief packages announced so far by the Government, and also including the decisions taken by RBI, along with today’s announcement, Modi announced that a total of 20 lakh crores will serve as the package to help India fight back the virus and the faltering economy.
Dubbed as ‘Aatma Nirbhar Bharat Abhiyan’, this package aims to support all sectors of the society who require help at this point in time. The PM added that the package covers all aspects – land, labour, liquidity, and laws, and will support all small businesses and MSMEs. He also said that this package is for the farmers and workers and other such people who have been working day and night, irrespective of the situation to help the people of India. Interestingly, this amount is 10% of India’s GDP, which currently stands at 20 lakh crores. Also, the latest budget by the Government is worth 35 lakh crores, and hence, the relief package is 75% of the entire country’s budget allocation. Therefore, that leaves the current package to be worth Rs 10.26 lakh crore. Now, on May 9, the government revised its estimated market borrowings to Rs 12 lakh crore from Rs 7.8 lakh crore. The RBI statement on the borrowing calendar said the revision had been necessitated on account of the Covid-19 pandemic. In other words, the cash handout the government could afford — given this ceiling — to extend to the poor, vulnerable and migrant workers, may be limited to Rs 4.2 lakh crore.
Further, the government can also recapitalise banks, helping their capital adequacy. Again, we just have to account for the interest to be paid on the recapitalisation bonds, which also does not amount to any substantial outgo. The package will focus on land, labour, liquidity and laws and includes the monetary easing announced by the Reserve Bank of India. Spelling out the details, Modi had said the self-reliant strategy will depend on five pillars: growing a new economy, creating a state-of-the-art infrastructure, setting up a technology-based delivery system, leveraging the young demography and by exploiting domestic demand.
The announcement came at a time when states have been demanding a fiscal stimulus package from the Centre and more financing options to tide over the financial crunch arising due to COVID-19 outbreak. The states had have been seeking support to MSMEs, infrastructure projects such as power, easing of interest rates on loans and assured market access to the agricultural produce. The declaration also came a day after his virtual interaction with the country’s chief ministers on tackling the COVID-19 menace. This was the PM’s fifth address to the nation, including a video message, following the outbreak of COVID-19.
“In this hour of crisis, local suppliers have met our demands; Indians have to be ‘vocal about local’ and buy products from them,” said Modi.
He urged the nation to be “vocal for local.”
Further, he divulged that the special economic package is for our labourers, farmers, honest taxpayers, MSMEs and cottage industry, among others.
The finance minister will announce details of the special economic package starting Wednesday.
In the entirety of the 33-minute speech, PM Modi focused on the urge for India to become self-reliant. He said that this was the only option if the 21st century has to belong to the nation. To help this happen, Modi also announced a massive relief package.