WAS IT BLAND? NOT REALLY!!
Hopes ran high after PM Modi addressed the nation, where he spoke of a Rs 20 trillion economic package, 10% of GDP, to combat the ravages of the virus, together with economic reforms. So far, the details of the Rs 20 trillion packages have not been overly exciting, but neither it’s bland. It would help in the segments that are needed the most. Bringing back jobs and livelihood.
Part 1: A much-needed government guarantee for loans to small businesses, a savior. That took care of cash flow needs and liquidity of small businesses and everybody hoped the next announcement would do something to boost demand.
Part 2: It focused solely on measures to help migrants and farmers. From free food grain to helping NABARD and boosting Kisan Credit Card.
Part 3: Focus on Agri Infra, Agri Marketing reforms, Agri Product, and pricing reforms. Very Sensible, but one wonders was it more of a budget presentation or a stimulus package to combat the damage caused to livelihoods by covid-19.
CMIE estimates over 114 million job losses due to lockdowns, and the biggest support this Mega stimulus has provided was helping MSMEs, through loans and liquidity which will help contain job losses. What was left broadly unanswered was demand creation through govt. push.
Many measures, though welcomed, are more of reforms than any stimulus. Now the biggest move will be to successfully help ease lockdown, as this happens to be the biggest roadblock for the economy to recover. China has been able to successfully contain the virus spread, barring few events of reoccurrence. India now has more cases of covid-19 infection than china.
THE BLACK DEATH: Daniel Defoe account of Great Plague of London in 1665, ‘It must be confessed that though the plague was chiefly among the poor, yet were the poor the most venturous and fearless of it, and went about their employment with a sort of brutal courage; I must call it so, for it was founded neither on religion nor prudence; scarce did they use any caution, but ran into any business which they could get employment in, though it was the most hazardous.’ We will see this repeating in 2020.