This Presentation gives a brief on the 20-Lakh-Crore Package announced by Union Finance Minister Nirmala Sitharaman in five tranches.

1. DECODING OFGOVERNMENT OFINDIA 20
LAKH CRORE COVID PACKAGE
BY NIKITA TILOOMALANI
MBA (BANKING & FINANCE)
AMITY UNIVERSITY, MUMBAI

2.  To cushion the economic impact of the virus, Honourable Prime Minister Narendra Modi Ji
announced an economic package worth Rs 20-lakh crore for the poor migrants' population and
small businesses to help them navigate through the tough times on account of economic
disruptions due to Covid-19.
 The package includes tax relief for small, micro, and medium enterprises and incentives to
boost domestic manufacturing as well as attracting investments. The combined package works
out to roughly 10 percent of the GDP, making it among the most substantial in the world after
the financial packages announced by the United States, which is 13 percent of its GDP, and by
Japan, which is over 21 percent of its GDP.
 The Rs 20 lakh crore package includes Rs 1.7 lakh crore package of free food grains to poor
and cash to poor women and elderly, announced in March, as well as the Reserve Bank's
liquidity measures and interest rate cuts. While the March stimulus was 0.8 percent of GDP,
RBI's cut in interest rates and liquidity boosting measures a total 3.2 percent of the GDP (about
Rs 6.5 lakh crore).

3.  Most economic activity 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 relaxations to allow the
resumption of economic activity. The package focuses on land, labor, liquidity, and laws. It will
cater to various sections, including the cottage industry, MSMEs, laborers, middle class, and
industries.
 Proposals such as giving full tax exemption to companies making a new investment of a
minimum threshold in sectors such as medical devices, electronics, telecom equipment, and
capital goods were said to be under consideration of the government. Investments in
infrastructure 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.
 The Government of India introduced an economic stimulus package of Rs 20 lakh crore on
May 12, 2020. It works out to roughly 10% of the GDP of the country, targeting to rectify the
Indian economy from the COVID-19 crisis. It is expected that the stimulus will help in
reforming the paradigm of the Indian manufacturing industry to integrate into the global value
chain.

4. Below is the complete break-up of the package launched to make India ‘self-reliant’ amid
and post COVID times :-
The five part stimulus package announced beginning May 13 comprised Rs 5.94 lakh
crore in the first tranche that provided credit line to small businesses and support to
shadow banks and electricity distribution companies.

5. The second tranche included free food grain to stranded migrant workers for two
months and credit to farmers, totaling Rs. 3.10 lakh crore.

6. Spending on Agriculture Infrastructure and other measures for agriculture and allied
sectors in the third tranche totaled to Rs 1.5 crore.

7. The fourth and fifth tranches that dealt mostly with structural reforms totalled to Rs
48,100 crore.

8. Here is the summary of all the announcements so far, totaling over Rs 20 lakh crore.

9. CONCLUSION
 The government’s Rs 20 lakh crore economic support package, intended to help the
economy tide over the Covid-19 crisis, will involve a very small amount of direct
government spending. It is estimated that the actual fiscal impact on the budget could
reach the bottom based on the calculations and assumptions made during the series of
announcements. The package may fall short of mitigating the near-term challenges for
some businesses, but it is better designed to improve India’s medium-term growth
potential.
 The relief package is a bold attempt to help the world's one of the largest economies as it strives
towards its first full-year contraction in four decades. While the package contains a suite of
offerings targeted at different sections of the economy including the MSMEs, any subsequent
announcements should include labor reforms and contain a clear focus on addressing the
immediate need for cash for the MSME sector to meet its short-term working capital
requirements, preserve the entrepreneurial spirit and boost capital formation and consumption.