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PM Modi’s Announces Rs 20 Trillion Govt. Support for Self-Reliant India
PM Modi’s Announces Rs 20 Trillion Govt. Support for Self-Reliant India
May 13, 2020
The Rs 20 trillion economic revival package announced on Monday by Prime Minister Narendra Modi ranks among the most substantial in the world relative to the country’s GDP. Of the five pillars identified to support the edifice of a New India, infrastructure forms the second pillar.
Political analysts often say that Prime Minister Narendra Modi is full of surprises. That he makes his next big move when you least expect him to do so.
Unsurprisingly, this is a statement that is borne out by events in the recent past. Be it demonetisation, the Balakot airstrikes on terror camps located in Pakistan, the nationwide lockdown for the containment of the COVID-19 pandemic, or Tuesday evening’s announcement of a Rs 20 trillion “stimulus package” to boost a beleaguered economy.
Since the past few days there was a strong buzz in political circles and India Inc., and also sporadic speculation in the media about the world’s fifth-largest economy announcing a revival package as part of its fight against the COVID-19 pandemic. A couple of days ago, the New Delhi-based industry chamber Confederation of Indian Industry had sought an “immediate substantive stimulus” of Rs 10.5 trillion to support the country’s poor and the industry.
In an April 27
welcoming the monetary policy measures initiated by the Reserve Bank, India’s leading financial advisory firm CRISIL had said that while the steps were a welcome relief, the federal government seemed to be taking measured steps and not trying to front-load its response, unlike in many other nations that had proactively announced large fiscal-support packages. “The Indian government, therefore, needs to step up its fiscal response drastically. The government seems to be working on another stimulus package, which should hopefully address these issues,” it had recommended.
Therefore, the Prime Minister Modi’s announcement of a Rs 20 trillion package during his fifth address ever since India announced the world’s largest lockdown on March 24 came as a welcome surprise in that it has exceeded everyone’s expectations.
Twenty minutes into his address to the nation, Modi reminisced about the time when at 51-year he was entrusted with his first major political responsibility as the as Gujarat chief minister in the aftermath of the devastating earthquake that had rocked the western state’s Kutch region.
“In that situation no one could have imagined that the situation would ever change. However, Kutch stood up, Kutch started moving, Kutch moved. This is the grit and determination of us Indians,” he mentioned.
“If we are determined then we can reach our goals and no path will be difficult. And today there is a will and there is a way. That is to make India self-reliant. Our combined resolve is so strong that India can become self-sufficient,” he added.
Five Pillars for New India: Economy, Infrastructure, System Demography & Demand
The prime minister then elucidated the five pillars that will support this edifice of a new India. The first pillar was economy that leads to a quantum jump rather than incremental change in growth. The second pillar was infrastructure that becomes the identity of a modern India. The third pillar was the system driven by technology to fulfill the dreams of the 21st century. The fourth pillar was the world’s second-most populous nation’s vibrant demography that would power its pursuit of self-reliance. The fifth pillar was demand, which could be leveraged only through harnessing of the full potential of the demand and supply chain in the economy.
The prime minister then went on to officially announce the Rs 20 trillion special economic package with the resolution of Atma Nirbhar Bharat Abhiyan or ‘Self-Reliant India Campaign’.
“This package is about 10 per cent of India’s GDP. With this package various sections of the country and those linked to economic system will get support and strength of Rs 20 trillion. This package will give a new impetus to the development journey of the country in 2020 and a new direction to the self-reliant India campaign,” he averred adding, “In order to prove the resolve of a self-reliant India, land, labor, liquidity and laws, all have been emphasised in this package.”
Modi said that the holistic package had been formulated keeping in mind the requirements of industry segments from the cottage industry to micro, small and medium enterprises (MSME)s to the farm sector. He then said that starting Wednesday, Finance Minister Nirmala Sitharaman would share more information about the various aspects of the package.
Also, in one of his most recent commitments to provide a major push to economic growth, the prime minister hinted at broadening the scope of reforms.
“These reforms will be in the entire supply chain related to farming so that the farmer is also empowered and will have minimal impact on agriculture in any other crisis like corona in future,” he declared.
“These reforms will be for, rational tax system, simple and clear rules-of-law, good infrastructure, capable and competent human resources, and building strong financial system. These reforms will encourage business, attract investment and strengthen our resolve for Make in India,” he added.
Be Vocal About Local
The prime minister also emphasised on the need for India to play a much bigger role in the global supply chain by making the domestic industry competitive and efficient. He advised that one good way of achieving that was by giving adequate importance to the development of local manufacturing, local market and local supply chain.
“The global brands you feel today were sometimes also very local like this. But when people started using them, started promoting them, branding them, proud of them, they became global from local products. Therefore, from today every Indian has to become vocal for their local, not only to buy local products, but also to promote them proudly,” he said.
The prime minister concluded his address with a Sanskrit quote which means what is in our control, is happiness. Explaining that self-reliance led to happiness, satisfaction and empowerment, he said that the 21st century could be made the century of India through the collective pledge of 1.3 billion people.
The package comprises the March announcement of Rs 1.7 trillion package of free foodgrains and cash to poor as well as RBI’s liquidity measures and interest rate cuts. While the March stimulus was 0.8 per cent of GDP, RBI’s cut in interest rates and liquidity boosting measures totalled to 3.2 per cent of the GDP or about Rs 6.5 trillion.
The package also ranks among the most substantial in the world. According to the German online portal
, the financial packages announced by the US is 11 per cent of its GDP, Japan over 21 per cent of its GDP, Australia 9.9 per cent of the GDP, EU 4 per cent of the GDP and Brazil 6.75 per cent of GDP. Meanwhile, the relief package announced by China is 2.5 per cent of its GDP.
Moreover, in their Monday video conference with the prime minister the states had sought a
fiscal stimulus package
and more financing options to tide over the financial crunch to support MSMEs, infrastructure projects, easing of interest rates on loans and assured market access for agricultural produce.
A slew of fiscal and liquidity provisioning measures is expected to be announced for different components of the economy by the finance minister in the coming days. Factors such as increase in borrowing programme to Rs 12 trillion from Rs 7.8 trillion had given the government more room to spend. For instance, some of the worst-hit sectors like aviation and hospitality have been demanding some support from the government. According to a CRISIL estimate, the country’s
civil aviation industry
could be looking at an accumulated loss of nearly Rs 250 billion this fiscal.
Modi also gave a clear indication of more relaxations in the fourth phase of the lockdown or Lockdown 4.0 from May 18. He advised people to follow all the social distancing protocols including Do Gaz Ki Doori or ‘two-yard distancing’ as the country worked towards reviving the economy.
Atma Nirbhar Bharat Abhiyan
Small And Medium Enterprises
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