Even as the nationwide lockdown, now extended for over two weeks, has hurt the economy and killed jobs, Finance Minister Nirmala Sitharaman has not come up with a concrete stimulus package to mitigate the impact. All she has managed to announce so far is a Rs 1.7-lakh crore relief package for the country’s poor and daily wage earners under the Pradhan Mantri Garib Kalyan Yojana. There have been other regulatory and compliance relaxations in the wake of the rapid spread of the novel coronavirus, but no comprehensive revival plan.
The Garib Kalyan Yojana is aimed at helping daily wage earners and migrant laborers in the short term. A stimulus package, if and when it is there, will help resuscitate the economy by boosting spending in such a way that it generates employment.
So, there has been no stimulus package as yet from the government. On the contrary, other countries such as the US, Australia, Germany, Italy, Spain, Thailand, Indonesia, and Switzerland have already announced big boosters and stimulus packages to combat the economic challenges arising out of the spread of COVID-19.
The US has come out with a $2-trillion stimulus package—which works out to be 11 per cent of its GDP, Australia has carved out a $133.5 billion package or 9.7 per cent of its GDP. China, where the coronavirus originated, has announced a $145.4 billion stimulus package—1.2 per cent of its GDP.
Back home, many companies, large and small, have resorted to downsizing of their staff after their bottom-lines came under severe pressure. “Work at my export unit has come to a standstill and my revenues have dried up, where will I get the money to pay my employees from?” asked a mid-sized exporter.
The worst impacted, needless to say, is the labor force engaged with the unorganized sector.
While the lockdown was initially slated to be lifted tomorrow, Prime Minister Narendra Modi today extended it till May 3 in the wake of the rising number of coronavirus cases.
Modi, on March 19, made his first address relating to the spread of COVID-19 and assured the industry and business community that an economic task force under the Finance Minister was at work and all necessary steps would be taken to cushion the economy.
Little has been done to support the economy. What now needs to be prioritized is the announcement of a well thought-out and bold stimulus package, which will put an end to the uncertainty on the economic roadmap ahead, even if it means deviating from the fiscal consolidation path. In addition to this, public expenditure must be significantly enhanced to boost consumption and demand.
Several economists have said that in case the package is not appropriate to support the economy, India may not witness any growth in the current financial year..