It's been more than 45 days since PM Modi called for the nationwide lockdown to curb the spread of coronavirus. On Tuesday, Narendra Modi announced an economic package, which he said was worth Rs 20 lakh crores.
The package includes previously announced measures to save the lockdown-battered economy, and focuses on tax breaks for small businesses as well as incentives for domestic manufacturing.
The announcement got mixed reactions, but the general public has a 'basic' question. That is, where will the money for this package come from and how much will the common man benefit from 20 lakh crore package?
The combined package works out to roughly 10 percent of the GDP, making it among the most substantial in the world after the financial packages announced by the United States, which is 13 percent of its GDP, and by Japan, which is over 21 per cent of its GDP.
The money needed for this package can be raised by the government by selling its own stake in government companies. Similarly the country has an abundance of gold, it does not seem to be a problem. In addition, the government has a way of printing more notes like the US and Europe. But, it is more likely to increase inflation. Therefore, it will be seen as a last resort, said Vinayak Kulkarni an investment advisor.
The two sectors that generate maximum employment are infrastructure and real estate. As many as 269 industries depend on the real estate sector. However, due to scandals and crisis, many banks were reluctant to lend to industries.
In view of this, the decision of the government to provide credit guarantee has to be justified. Therefore, banks will come forward for disbursement of loans, many industries can be started and money can reach the working class as well as the demand-supply chain will be smoothened as employment will be created, said Kulkarni.
The package, he said, will focus on land, labour, liquidity and laws. It will cater to various sections, including cottage industry, MSMEs, labourers, middle class, and industries.He said that a self-reliant India will stand on five pillars viz economy, which brings in quantum jump and not incremental change; infrastructure, which should become the identity of India; technology-driven system; vibrant demography; and demand.The Prime Minister did not share details saying Finance Minister Nirmala Sitharaman will over the next few days spell out details for each sector. He, however, dropped hints that the package may include tax relief for small, micro and medium enterprises and incentives to boost domestic manufacturing as well as attracting investments.