The Atmanirbhar Bharat Abhiyan economic package valued at Rs 20 lakh crore, is around 10 per cent of India’s GDP for the 2019-20 fiscal year. Be that as it may, many have openly catechised whether this economic package will be able to provide passable forthwith relief to the most vulnerable sectors of the economy, or even stop India’s precipitous slide in GDP growth.

 AD Singh RJD notes, “The Indian economy is facing extraordinary hurdles as a result of COVID-19, and the government has been scrambling to offset the negative effects of this unprecedented catastrophe. Even well-intentioned policies, however, will be ineffective if the problems are fundamental. The best example of this is the government’s policy stimulus, Aatmanirbhar Bharat Abhiyan.”

First and foremost, the Rs 20 lakh crore package includes both fiscal and monetary measures, with the latter consisting of credit guarantees and liquidity injections into banks and other financial sector institutions rather than the economy as a whole. The majority of the package consists of liquidity measures that the RBI is required to communicate to banks and banks to citizens. Due to poor monetary policy transmission, this transmission would be less smooth.

Secondly, RJD Rajya Sabha member, AD Singh RJD informs that the stalemate has depressed aggregate demand, necessitating fiscal intervention. However, by depending heavily on credit infusion to stimulate the economy, the package has failed to recognise that investment can only increase when individuals of all income levels have money to spend.

Additionally, the MSME sector may face a demand shortfall unless the rest of the domestic economy is restored, and production may soon grind to a halt. “The stimulus programme, according to the government, is worth about 10 per cent of India’s GDP. However, because the government is concerned about the fiscal deficit, financing it would be tough. To raise funds for the initiative, the government is seeking a disinvestment. However, the majority of Indian firms are already heavily in debt, making it difficult for them to invest in PSUs. Furthermore, borrowing in foreign markets is difficult because the rupee’s value against the dollar is at an all-time low,” says AD Singh RJD.

Furthermore, AD Singh RJD suggests that the economic package for the country emerging from the lockdown will need to include a stimulus that will boost demand across the board. For the stimulus package, India’s foreign reserves are at an all-time high, so it could strategically use those reserves to finance its needs. Privatisation, taxation, loans, and increased international help may be required to cover the remaining costs. Unless and until it is accompanied with reforms in multiple areas, any stimulus package will fail to reflect the trickle-down impact. As a result, the Atmanirbhar plan also includes the unfinished objective of comprehensive reforms, which might include reforms in the civil service, education, skill development, and labour, among other things.

Source: Tribune India