The figure of ₹20 lakh crore announced by Prime Minister Modi as stimulus is more than the GDP of almost 150 countries. Will this stimulus revive the economy and provide much-needed liquidity in markets?
Instead of fawning over the zeros in the package, we must look at its net impact. In normal parlance, a stimulus is an outflow from the treasury — but this stimulus disappointingly comes in the form of credit.
We are in a situation where having shot ourselves in the foot with a sudden total lockdown, we can expect the economy to limp to a slow agonising recovery.
Uncertainty during the lockdown created a distrust that led lakhs of panic-stricken migrant workers to flee cities. To their horror, they have found themselves living across 29 countries as each state erects its own barriers to their homecoming. This is not an experience they are likely to forget in a hurry. They will now need to be convinced that they are indeed living in one Union of India.
Cash relief would have been most effective if it instantly accompanied the lockdown. Migrant workers must now be provided relief along their hobbled journey home using funds such as the SDRF, and helped to reach wherever they are headed.
We keep talking about labour reform. We have 51 central labour laws, but find that not one of them could protect these migrant workers. Suspension of labour laws, as is being done by some states is not the answer. We need laws — but laws that genuinely protect our workers.
The actual size of the stimulus package seems to have been constrained because GOI had its eye on India’s credit ratings. Many credit schemes are repackaged. Some such as the Credit Guarantee Scheme of ₹3 lakh crore for the MSME sector are yet to be spelled out in detail.
Reforms are needed — particularly agriculture and labour. The crisis may have given the opportunity. But reform cannot work as a ritual invocation — it must be built painstakingly brick by brick.
Atmanirbhar Bharat is not a Swadeshi vs. Videshi binary divide. Let us first be atmanirbhar in our thinking — the rest will follow. The most important reform and also the hardest is going to be process reform.
Indian business is crying for a clear transparent tax regime with globally competitive input costs, including the costs of doing business. Give them that and they will make for India as well as the world.
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