The expectations for an economic relief program following Covid-19 were really high. And these exorbitant expectations were perhaps largely responsible for the disappointment that greeted the announcement of the economic relief package of 1.7 trillion rupees by Finance Minister Nirmala Sitharaman on Thursday.
By itself, this announcement is welcome and an essential first step that should help alleviate the economic hardship faced by millions of poor Indians after the country was locked out on Wednesday to prevent the spread of the flu. But there is no denying that more needs to be done and a few more cycles of this assistance will be needed in the coming weeks, as the impact of the deadlock and the disease on the economy becomes more evident.
Make no mistake about what prompted these high expectations. It was none other than Prime Minister Narendra Modi who raised hopes during his speech to the nation last week, Thursday, March 19, and announced that a task force, chaired by Sitharaman, would develop measures. to combat the economic effects of the pandemic. Shortly after, everyone started calculating the scope and size of the economic package.
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Four days have passed without any further announcements on the package.
Tuesday, March 23, Sitharaman held a press conference to announce some easing in the compliance standards of a set of economic laws, but on the economic package, his only comment was that it was under preparation and would be announced more sooner than later. Modi addressed the nation the same evening, but no mention was made of the economic relief plan except for a provision of 15,000 crore rupees to strengthen health measures. But the same day, a nationwide lockdown was announced. The economic consequences of the foreclosure were known to everyone when this decision was rightly made. The reason that the economic package was not announced simultaneously with the foreclosure does not reflect well how the crisis was managed.
Meanwhile, former finance minister P Chidambaram began to speak of the need to provide at least Rs.5 trillion through an economic back-up plan to combat the effects of Covid-19. This would have amounted to just over 2% of India’s total gross domestic product (GDP).
In the meantime, the United States has announced a $ 2 trillion financial assistance program, or 10% of its GDP. Quick comparisons were underway on what the amount of the Indian government would look like if something similar were to be done by New Delhi. Just over 20 trillion rupees? But then the United States is in a much deeper mess than India today and a comparison with that country may not be appropriate. But the total package that was announced on Thursday represents less than 1% of India’s GDP. It was far from the American amount or the figure Chidambaram had mentioned a few days earlier.
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These comparisons and the seven days it took the government to come up with a package were the source of the disappointing response from most people who may now be asking for more and waiting for the next set of packages.
Two additional points on the package should be reiterated. First, the package announced so far only meets the needs of the poor, including migrant workers, organized workers in small businesses and the construction sector, women, farmers and health workers. The impact of the foreclosure on other segments of the economy, including manufacturing and a multitude of service providers, would be enormous. There is also an urgent need for an economic package for these sectors.
Second, the economic package cannot remain silent on the need to build or strengthen the health care infrastructure sector to ensure that more tests can take place quickly and that flu patients can get the treatment they need. , if and when the virus spreads. Obviously, there are two or three other economic assistance measures that need to be in place. What was deployed on Thursday will not be enough.