Prime Minister Narendra Modi on Tuesday, 12th May 2020 said a ‘new lockdown’ would continue beyond the end of the current phase on 17th May, but that the Centre will offer a massive special economic package to revive the economy, which has been battered by the Coronavirus pandemic.
The total cost of the economic package would be Rs 20 lakh crore. Modi said it would be called ‘Atmanirbhar Bharat Abhiyan’ (self-reliant India campaign).
Prime Minister said the fiscal package that will benefit farmers, labourers, honest tax payers, cottage industries and MSMEs, equals to 10% of India’s GDP. It is important to mention that this would be the 5th largest package announced by any nation to tide over the economic impact of Covid-19 pandemic.
PM Modi also said that “The package will have emphasis on land, labour, liquidity & laws and it will pave the way for a self-reliant India”. He added that Finance Minister Nirmala Sitharaman would announce the contours of the package starting Wednesday.
He told “This package is for that worker, that farmer in the country, who is working hard day & night; for the Indian middle class and for the industry which is committed to make India stronger.”
Economic package
As part of the package, PM hinted at sops for the middle class & Indian corporates along with changes in customs duties on imports to make Indian products cutthroat. This could mean reduction on import duties on raw materials required for products manufactured in the country, as well as higher import duties on finished products to make sure Make in India becomes successful.
PM also said the Rs 20-lakh crore-package would include previous steps announced by RBI, along with the measures declared by the government to deal with the fallout of Covid-19 in March.
Centre’s decision to offer cash transfers as well as free foodgrains to India’s poor totalled around 1% of GDP.
Liquidity boosting measures announced by Reserve Bank of India in two tranches were equivalent to around 3.5% of GDP.
Besides offering a three-month loan moratorium, RBI announced liquidity infusion measures via different routes, including those to specific sectors such as non-banking finance companies, micro finance institutions & housing finance companies.
Centre had also announced a-Rs 40,000-crore production-linked incentive yojana to encourage large-scale electronics manufacturing in the country in March. It remains to be seen if this would be included into the calculations of the new package.
