The announcements made by the Finance Minister Nirmala Sitharaman on Sunday concluded the relief measures undertaken in five tranches by the government as part of the economic package announced by PM Modi for ‘Atmanirbhar Bharat’. The minister, towards the end of her speech, also provided a tranche-wise complete break-up of the stimulus

1. DECODING
THE GOI 20
LAKH CRORE
PACKAGE
BY-AARON ANDRADE
AMITY BUSINESS SCHOOL

2. UNDERSTANDING THE STIMULUS
The announcements made by the Finance Minister Nirmala
Sitharaman on Sunday concluded the relief measures
undertaken in five tranches by the government as part of the
economic package announced by PM Modi for ‘Atmanirbhar
Bharat’. The minister, towards the end of her speech, also
provided a tranche-wise complete break-up of the stimulus
Importantly, the overall package which stood at Rs 20,97,053
crore, included the Rs 1.92 lakh crore stimulus from measures
announced by Modi recently such as the Pradhan Matri Garib
Kalyan Package worth Rs 1.7 lakh crore. A big chunk, in fact
the largest, worth Rs 8.01 lakh crore of the economic package
belonged to the various measures by the Reserve Bank of
India in February, March and April this year to inject liquidity.

3. TRANCHE 1 - MAY 13,2020
 Union Finance Minister Nirmala Sitharaman Wednesday
announced the first tranche of an economic relief plan whose
primary focus was to alleviate the sweeping distress in the Micro,
Small and Medium Enterprises sector that lies at the heart of the
industrial ecosystem and employs an estimated 11 crore persons,
including much of the country’s migrant workforce.
 While the 16 specific announcements announced in the first
tranche cut across sectors that range from MSME and Non-
Banking Finance Companies (NBFCs) to real estate and power
distribution and the salaried, the overarching theme was that of
infusing liquidity. And engineering a pass-through effect that
ultimately puts more disposable funds in the hands of both
entrepreneurs and employees.
 This included Rs 3 lakh crore collateral-free loans and Rs 50,000
crore equity infusion for MSMEs through Fund of Funds.
Liquidity relief measures worth Rs 30,000 crore were also
announced for NBFCs, HFCs etc. and Rs 90,000 crore for power
distribution companies.

4. TRANCHE 2 - MAY 14,2020
 Unveiling the second tranche of the economic stimulus
package as part of ‘Self-reliant India Mission’ to cushion
the impact of Covid-19, Union Finance Minister Nirmala
Sitharaman Thursday announced three measures for the
distressed migrant workers.
 Firstly, migrant workers, who are neither National Food
Security Act (NFSA) or State Card beneficiaries in the
state they are stationed, will be provided 5 kg of grains
per person and 1 kg Chana per family per month free for
two months, the Finance Minister said.
 Sitharaman also announced the ‘One Nation One Ration
Card’ scheme under which migrants will be enabled to
access Public Distribution System from any Fair Price
Shop in the country by March 2021.

5. TRANCHE 3 - MAY 15, 2020
Union Finance Minister Nirmala Sitharaman announced 11
measures for the agriculture sector as part of the third trench
of the government’s Rs 20 lakh crore Covid-19 relief package.
The Finance Minister Nirmala Sitharaman also announced the
setting up of a Rs 1 lakh crore Agri Infrastructure Fund; the
formalisation of Micro Food Enterprises, with an outlay of Rs
10,000 crore; a vaccination drive against food and mouth
disease among cattle; extension of the Operation Greens from
tomatoes, onion and potatoes to all fruits and vegetables; help
for fishermen through the Pradhan Mantri Matsya Sampada
Yojana; a Rs 15,000-crore Animal Husbandry Infrastructure
Development Fund; Rs 4,000 crore for promotion of herbal
cultivation; and a Rs 500 crore scheme to promote
beekeeping.

6. TRANCHE 4 & 5 - MAY 16, 2020)
Most of the measures for eight sectors announced Saturday
under the fourth tranche of Union Finance Minister Nirmala
Sitharaman’s Covid economic package were either a new push
to old reforms proposals or an aggregation of earlier
decisions.
The latter includes: commercial coal mining; coal gasification
projects; building a hub for aircraft maintenance, repair and
overhaul (MRO); privatisation of airports, and optimisation of
Indian airspace. Nirmala Sitharaman on Saturday announced
easing utilization of the Indian air space to reduce air travel
cost. The minister also announced the commercial mining in
the coal sector and privatizing discoms in metros to streamline
their functions for better accountability. The minister also
talked about private participation in the space sector along
with coming up with a policy for private players.

7. Nirmala Sitharaman, the union finance minister, unveiled the fifth and last tranche of the Rs 20 lakh crore COVID-19
economic package as part of the “Atmanirbhar Bharat Abhiyan (Self-reliant India campaign)” on Sunday.
They allocated an additional Rs 40,000 crore for the Mahatma Gandhi National Rural Employment Guarantee Act
(MGNREGA) for job creation in India’s hinterland. The government had earlier allocated Rs 61,000 crore in the
budget for this financial year.
Sitharaman also announced the formulation of a new Public Sector Enterprises Policy that would allow for
consolidation of the PSU firms in strategic sectors. Each sector would have up to four such firms while state-owned
enterprises will be privatized.

8. ACTUAL RESULT OF THE 20-LAKH CRORE PACKAGE
The overall components in the package are as follows-
 Set of measures taken by the government before Modi’s speech on May 12,
 The Reserve Bank of India’s liquidity measures over the last two months
 Five tranches announced by Nirmala Sitharaman
The main focus of the government’s measures is providing liquidity boost for small businesses, shadow banks and
electricity distributors, as well as loan support for farmers. Small businesses are the bedrock of the economy.

9. Loan and Credit support helps to cushion the blow for businesses but won’t boost consumer spending, a dilemma that
many countries around the world are facing as job losses mount. The spending and reform measures proposed by
India’s government are more geared to improve supply-side bottlenecks and support economic growth in the medium-
to long-term. It does not provide citizens with a cash boost to spend.

10. India’s services industries, which make up more than half of GDP, weren’t specifically targeted in the government’s
relief package. Businesses from airlines to hotels to entertainment centers will continue to struggle despite the
financial support measures outlined. Hence, only the first two tranches are to have an impact on the current situation.
There has been some funding for street vendors and migrant labourers, but this will, at best,be in the form of
sustenance. Central and states governments have to urgently take up rehabilitation of migrant labour. A plan has to be
drawn up to bring them back as they cannot live on MGNREGA or agriculture, from which they had moved away to
begin with.

11. MY OPINION ON THE TOPIC
First, let us understand the difference between monetary and fiscal policy measures. While monetary policy falls
under the purview of the RBI, the latter is formulated by the ministry of finance. Monetary policy tries to control the
money supply in an economy by lowering and increasing interest rates. For example, when the interest rates are
lowered, it is cheaper to borrow from banks and more money then comes into the economy.
Fiscal policy, on the other hand, tries to manipulate the demand in an economy through government spending and its
revenue collection. For instance, when the government reduces taxes, it puts more money in the hands of people
which stimulates demand.

12. Decoding the package, one realised Rs 20 lakh crore wasn’t a fresh windfall for the public. It was an aggregate of
earlier monetary, fiscal and other policy measures already undertaken, along with the current set of announcements.
It was Disappointing. Once the numbers were analysed ,the middle-income group realised there was nothing
substantial in it for them. They felt cheated.

13. The honest truth is that of the 10% of GDP stimulus that was announced as an economic relief package, only 6.5% is
attributable to the government, the balance going to the credit of the RBI under its monetary policy measures. Of this
6.5%, a large part is towards contingent liabilities and only 0.8% is the actual fiscal cost.
In conclusion, we are in for the long haul. The economy will have to be reconstructed and economic stimulus
measures will continue to flow. There are financial constraints within which India will have to work. This round, if we
measure it in terms of actual cash outflow, goes to the poor and the weaker sections of our society as well as the
MSME sector