The mega Rs 20 lakh crore stimulus package announced on Tuesday by the prime minister Narendra Modi includes previously announced measures to save the lockdown-battered economy and focuses on tax breaks for small businesses as well as incentives for domestic manufacturing. The combined packages work out to roughly 10 per cent of the GDP, making it among the most substantial in the word after the financial packages announced by the united states, which is 13 per cent of its GDP, and by Japan, which is over 21 per cent of its GDP.
The Rs 20 lack crore package includes Rs 1.7 lack crore package of free foodgrains to poor and cash to poor women and elderly, announced in March, as well as a Reserve Bank’s liquidity measures and interested rate cuts. while the march stimulus was 0.8 percent of GDP, RBI’s cut in the interest rate and liquidity boosting measures totaled to 3.2 percent of the GDP (about Rs 6.5 lakh crore).
A special economy package is being announced to make India self-reliant, ” PM Modi said in his third address to the nation over COVID-19 pandemic. ” this package took together with earlier announcements by the government during COVID crisis and the decision taken by RBI, is to the tune of Rs 20 lakh crore, which is equivalent to almost 10 percent of India’s.”
the most economical in the country had come to a standstill after the government imposed a 21-day nationwide lockdown beginning march 25 to check the spread of COVID-19. the lockdown has since been extended twice through May 17, with some relaxation to allow the resumption of economic activity.
The package, he said, we focus on land, labor, liquidity, and laws. it will cater to various sections, including the cottage industry, MSMEs, laborers, middle class, and industries.
Prime Minister Narendra Modi did not where the details saying, finance minister Nirmala Sitharaman will over the next few days spell out details for each sector.
But going by the previous figures, it would seem that an additional Rs 12 lakh crore will be pumped into the economy.
He, however, dropped hints that the package may include tax relief for small, micro and medium enterprises and incentives to boost domestic manufacturing as well as attracting investment.
proposals such as giving full tax exemption to companies making a new investment of a minimum threshold in the sector such as medical devices, electronics, telecom equipment, and capital goods were said to be under consideration of the government, investments in infrastructure are may also form part of the package.
Easy access to land as well as labor reforms may also form part of the package to lure companies leaving china.