Maths behind Modi’s Rs 20 lakh crore stimulus package
In his address to the nation on May 12 Prime Minister Narendra Modi talked about Rs 20 lakh crore package to revive the Indian economy battered by Covid-19 pandemic. This has created a lot of curiosity and debate. The most important being the who will get what.
Finance Minister Nirmala Sitharaman on Sunday gave break-up of the economic package.
According to the finance minister, total size of the package exceed the Rs 20 lakh crore promise made by Prime Minister Modi. The overall stimulus provided by the government under Atmanirbhar Bharat Package stand at Rs 20,97,053 crore.
This includes Rs 8.01 lakh crore of liquidity measures announced by the Reserve Bank of India since March.
Finance Minister Sitharaman conducted fifth press conference on Sunday to give details about the package. She has unveiled several stimulus and reform measures over the last five days. The measures announced by the finance minister over the last five days have financial implication of Rs 11.02 lakh crore. Rs 1.92 lakh crore worth of relief measures were announced by the government even before the Rs 20 lakh crore promise made by Prime Minister Modi. It included Rs 1.7 lakh crore of relief measures announced under Pradhan Mantri Gareeb Kalyan Yojana (PMGKY).
As part of the Rs 1.70 lakh crore PMGKP, the Government announced a distribution of free food grains, cash payment to women and poor senior citizens and farmers etc.
“The swift implementation of the package is being continuously monitored. Around 41 crore poor people received financial assistance of Rs 52,608 crore under the PMGKP,” Sitharaman said.
The overall stimulus provided by the government under Atmanirbhar Bharat Package stand at Rs 20,97,053 crore.
On the fifth day the finance minister announced Rs 40,000 crore increase in allocation for MGNREGS to provide employment boost. The move will help generate nearly 300 crore person days in total addressing need for more work including returning migrant workers in Monsoon season as well. Creation of larger number of durable and livelihood assets including water conservation assets will boost the rural economy through higher production.
Modi pledges economic package worth Rs 20 lakh crore to tide over Covid crisis
After the prime minister’s announcement, Sitharaman has unveiled announced the financial package in five tranches. In a press conference on May 13 finance minister announced stimulus package worth Rs 5.94 lakh crore. That included Rs 3 lakh crore Emergency Working Capital Facility for Businesses, including MSMEs. On the first day of the press conference finance minister had also announced Rs 90,000 crore liquidity injection for DISCOMs and Rs 45,000 crores partial credit guarantee Scheme 2.0 for Liabilities of NBFCs/MFIs.
On the second of the series of the five-day press conference finance minister announced Rs 2 lakh crore concessional credit boost to 2.5 crore farmers under Kisan Credit Card Scheme and Rs 30,000 crore additional emergency working capital for farmers through NABARD.
On the second of the series of the five-day press conference finance minister announced Rs 2 lakh crore concessional credit boost to 2.5 crore farmers under Kisan Credit Card Scheme and Rs 30,000 crore additional emergency working capital for farmers through NABARD.
Highlight of the third tranche was Rs 1 lakh crore financing facility for funding Agriculture Infrastructure Projects at farm-gate & aggregation points (Primary Agricultural Cooperative Societies, Farmers Producer Organizations, Agriculture entrepreneurs, Start-ups, etc.). Finance minister had also unveiled Rs 20,000 crore for Fishermen through Pradhan Mantri Matsya Sampada Yojana (PMMSY).
The fourth and fifth tranches dealt mostly with structural reforms. These two tranches put together has financial implication of Rs 48,100 crore.
If all the measures get implemented as announced it would lead to a huge jump in the government expenditure and the fiscal deficit. For the current fiscal the union government’s total Expenditure Budget was pegged at Rs 30,42,230 crore, as per the union budget 2020-21.
Reacting on the stimulus package former Finance Minister P Chidambaram said the actual amount of the relief package could be ascertained through the increase in the expenditure budget.
“We are not agreed on the amount of additional expenditure involved in your PMGKY and 5-tranche economic package. When you do the additional borrowing we will know the answer,” Chidambaram twitted.
“The additional borrowing and additional expenditure (over and above the Expenditure Budget of Rs 30,42,230 crore) will be the true measure of the Fiscal Stimulus,” he added.
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