Atmanirbhar Bharat – The Economic Package

The outbreak of the COVID-19 pandemic has rubbed salt into the wounds of the Indian economy already stuttering and chafing at the seams from the devastating effects of a prolonged economic slowdown which has seen growth rates having already plummeted to abysmal levels.  With the outbreak of the pandemic, the spectre of a prolonged global economic recession looms large and Economists, while differing on the magnitude are unanimous that GDP rates across, save and except for some negligible exceptions are going to fall into negative territory. Thankfully, globally the Governments have reacted with alacrity and proactively in dealing with the aftermath, both in terms of combating the disease and also in dealing with the economic carnage and have rolled out measures to stem the tide of Individual and Societal misery.

The Indian Government has also come out with a seemingly vast, but actually debatable stimulus package, of Rs 20 lakh crore. This package aims to get the wheels of the economy back on track and alleviate the sufferings of the lower and middle class which by their sheer numbers alone are expected to play a significant role in ensuring societal equilibrium and in the process of economic revival. 

The stimulus while high on intention and seemingly gigantic in numbers, seems divorced from ground realities with emphasis on grand-standing and atmospherics while ignoring the pressing structural issues and economic imbalances and appears to be high on rhetoric alone.  While, on the positive side, it seeks to address some sectoral concerns and takes steps to improve credit flows to vital sectors of the economy, it does precious little to deal with immediate issues. This stimulus is to alleviate the suffering of the teeming masses which form the backbone of the entire agricultural, services and manufacturing sectors and have been the bulwark of India’s recognition as an economic superpower in the recent past.  No doubt the attempt to free up credit flows to the MSME sector, a marginal increase in subsidy and Direct benefit transfer to the bank accounts of the beneficiaries, the move towards a “one nation one ration card” are supremely innovative and worthy of appreciation. The stimulus sadly lacks the initiative to shore up demand by putting more money in the hands of the public leading to increased purchasing power. Economists across the divide are united in their opinion that the structural imbalances manifest in the Indian economy are the result of demand constraints arising out of a reduced purchasing power and propensity to spend which tendency has only become more pronounced in the wake of the pandemic with incomes highly uncertain and the future being hazy. 

Further, while the package does precious little to shore up the manufacturing sector, even the process of the lifting of the lockdown is caught in a whirlpool of its own with the prospect of the Damocles sword of the return to the Inspector Raj hanging over them permanently and the backward and forward linkages taking undue time to be again set up and be streamlined. The attempt to develop an “ATMANIRBHAR BHARAT” with its emphasis on building domestic manufacturing capabilities and not an inclusive India has the potential to denigrate into merely a political slogan if the Industry is not hand-held and supported at this crucial juncture. 

All in all, while a beginning has definitely been made, the need to be constantly vigilant to tweak the measures in the light of these developments, which are expected to be both fast-paced and dynamic is the need of the hour with an increased focus required on the immediate and medium-term.