How Will The Stimulus Boost The Indian Economy?
With all wits & discretion; it doesn’t look like a stimulus or relief package. It is a bonanza. So how’ll you take this? And are you foreseeing this for personal gains, or revival of various economic clusters, to put the ailing economy back on track.In whole, this great economic package was very much in need when the ‘wheels of the economy’ were all over the place.
What is the Stimulus & Its Importance In Economic Emergency ?
Stimulus is a package of--- tax rebates and incentives --used by the governments of various countries ,to stimulate and revive the economy,and save them from a potential crisis. Well, this package is more about boosting liquidity rather than fulfilling the demand for a fragile economy.
As per the media reports, this is supposed to be 10% of Gross Domestic Product, (though debatable) since COVID-19 stormed.By far it is the largest economic package amongst developing countries by India to revive the country’s economy.
Stimulus is Good, But Why are we Insensitive & Incomptent towards glaring loopholes !
Well, in whole, criticism is coming all round the corner be it opposition or political analysts. In our view,-- on the grassroot level --there is nothing to cheer about.Migrant labourers had a miserable time reaching their villages & home towns. Casualties occured everywhere.Implications of the mass exodus were such that even a few did not bother sleeping on railway tracks, or having to stuff in cement mixers for travel. Astounding sight for all of us. People standing in queues for food were beaten mercilessly by cops.
Many died of starvation for which no one took a moral responsibility. So what kind of stimulus are we thinking of ?
Such barbaric pictures are still grabbing eyeballs that even the --creature of the universe will plead guilty. What is the fault of those innocent migrants? Only poverty?The concealed truth of our so-called economy.
Thanks to the great Indian Politics that during this pandemic, we kept playing the “blame game”.Yes,the massive 20 lakhs crore $ 265 billion stimulus appeared as a bunch of hanging grapes having to reach to pluck it.Poor & unprivileged sections of the society are treated like that ' hungry fox' who despite many jumps could not pluck the grapes and end up saying ‘Grapes are sour”.
The Significance of The Mega Package
This package is aimed to recharge the battery of the economy by providing stimulus packages, and focus on tax breaks for small business as well as incentives for domestic manufacturing.
For the working class, yes, the hon'ble finance minister,” Nirmala Sitharaman” in five successive press conferences, quoted reformative measures for MSME, NBFC, & utilities (focus on liquidity), agriculture, power etc.
MSME is the one which gets the major boost as they can procure loans of up to 5 crores from banks with no terms & conditions in particular.They are eligible for procuring loan as the Govt. is expected to exhaust that amount by end of Oct.
Also, the working-class(salaried) will have the advantage of obtaining EPFO benefits.Hope those who fall in the category, are eligible to get 24 % EPFO from the government till March 2020, bring some respite. But this is only helpful if there is plenty of employment for all.
India currently has a ‘potli of problems’ along with containing the COVID-19 and the slowdown of the informal economy.While skimming through these facts with a microscopic view, the reformative measures from policymakers- looks mere procrastination. Finally, we explain that investors should remain focused on positive long-term themes in India.
Economy Improvement: A Doctor’ Order That will Take Time To Heal, as unconventional measures are necessary due to COVID-19
Despite economic hardship and challenges, we should have a long-term comprehensive approach & administrative model that suffice the necessities of a common man(unorganized sector) : mazdoor, kisans, pravasi shramik so that we could set an example to the world that despite being the world's second- most populous nation facing an unprecedented situation .
We the people of India or GoI, have not raised hands or given up yet.With no doubt as we are on the brink of LOCKDOWN 5.0.The last 65 days have badly impacted the micro-economy of a common but containing the COVID spread was needful. The sight in some horror movies appeared true in this pandemic time.
We expect a gradual return of economic activity, but the landscape will be different
Our base case remains that under the current lockdown assumptions,⁷ we expect an output loss of 6.0% to 8.0% of annual GDP and a higher fiscal deficit as tax collection should be lower.
We expect the economy will choose a gradual path because a certain amount of social distancing will be there for a long time to avoid any sort of community transmission. In turn, this will cause an uneven recovery across different sectors. Businesses where mass gathering is prerequisite, such as retail, hospitality, tourism, and construction sites, cinemas, exhibitions, may see ongoing restrictions and unusual conditions .On the other hand, sectors that cater to social distancing, including personal mobility, packaged foods delivery, automation,telecom, and home improvement,white goods, and consumer electronics, are likely to recover faster.
These measures laid the foundation for formalization-led growth. We also argued that despite fundamental building blocks in place, the re elected GoI has a unique opportunity to revitalize economic growth through the “3Rs”:
Recycle—Funding government spending needs through the privatization of state-owned enterprise assets.
Reinvest—Providing cash inflow for manufacturing firms to reinvest savings and develop a culture of “Swadeshi products so that it generates employment for blue-collar workers. And, further, increase the global market export share.
Rebuild—Aggregating savings by providing tax cuts & relaxations to the private sector & households along with monetary assistance to farmers.
We strongly recommend that these 3Rs should help address India’s cyclical economic challenges through higher government spending, re-monetizing the private sector and households, and create job opportunities by encouraging new investment.We all just need to stay alert, stay safe, while moving our baby steps to revive micro-economy and the economy, in whole.
