2. ๏จ Government of India announced an Economic
Stimulus package on 13th May 2020 worth โน 20
Lakh crore (20Bn$) which accounts for 10% of
the nations GDP. This package included
monetary and fiscal support. The stimulus also
includes extra expenditure, loans, loan
guarantees and other forms of commitments by
the Government and the Reserve Bank of India.
Finance Minister Nirmala Sitharaman
announced this package in 5 tranches from 13th
May to 17th May. Each among the 5 tranches
focused on different areas in the economy
3.
4.
5. ๏จ Free food grain
supply for migrants.
๏จ Affordable rental
accommodation.
๏จ Credit facility for
street vendors.
๏จ Credit linked subsidy
scheme
๏จ Concessional credit
for the farmer.
๏จ Refinance from
NABARD to
marginal farmers
๏จ An interest
subvention incentive
for Shishu loans
6.
7. ๏จ The third tranche of economic stimulus
announced by his government will help rural
economy and boost farmers' income. In he
third tranche of an overall package of Rs 20
lakh crore to deal with the economic fallout of
the COVID-19 pandemic, Finance Minister
Nirmala Sitharaman announced a slew of
measures for agriculture sector, including a Rs
1.63 lakh crore outlay, and amending the
stringent Essential Commodities Act to remove
cereals, edible oil, oilseeds, pulses, onions and
potato from its purview.
8.
9. ๏จ Structural Reforms- Structural reforms enabled
India in becoming an attractive investment
destination.
๏จ Policy Reforms to fast-track investments
๏จ Fast-track Investment clearances through
Empowered Group of Secretaries
๏จ Up gradation of Industrial Infrastructure-
Schemes will be implemented in states through
challenge mode for industrial cluster up
gradation of common infrastructure facilities and
connectivity.
10. ๏จ Public expenditure on health will be
increased
๏จ Debts that are related to the COVID-19 shall
be excluded from defaults under IBC.
๏จ Private sector will be allowed to participate in
all the sectors.
๏จ The public sector enterprises will get
privatised.
11.
12.
13. ๏จ The Stimulus package offered amounts to 10% of the nations
GDP, which is a huge deal considering the declining GDP.
The stimulus package would only be useful if it monitored
closely by the officials, or all the efforts are in vain. Due to
corona, a lot of businesses have shut down and many other
needs are deprived of cash for their sustainability. Due to
these reason, many MSMEโs and other businesses would be
opting to debt fund their further operations, this will result
in a rise of loans, and if there is not demand Post covid the
banks are going to suffer due to the rise of NPAโs. The
government should have taken some major steps to reduce
the NPAโs as banks are the foundation of any financial
system. Disruption in functioning of bank will cause chaos
in the financial system, and might also lead to rising
Inflation, lending rates and also Retail inflation.
14. ๏จ Government had also provided EMI payers moratorium period,
which was very comfortable for the users, but from a banks
perspective it lacked its purpose on many different levels. Banks
main source of income is interest on loans, which the moratorium
took away from them, exposing them to bad debts a no income.
A feasible solution to this problem would be making a
new body that would take care of all the NPAโs or waiving away
all the NPAโs for proper functioning of the banks. We need to
keep inflation in check so that the loan rates donโt rise way
beyond control and the economy is in check. If there is no demand
push post covid, it is directly going to affect the repayment of
loans and this will increase bad loans and NPAโs to a very huge
extent, which will lead to a collapse in the financial system.
Government needs to act on this and needs to act fast, it also
needs to take major steps towards getting GDP back to normal
rates and also work on getting demand push.
