The document summarizes India's 20 lakh crore economic stimulus package announced by Prime Minister Modi on May 12, 2020. It provides details on the objectives of making India self-reliant and boosting the economy through five pillars. The breakdown shows most of the stimulus came from RBI measures like liquidity injections rather than new government spending, which accounts for only around 1.5 lakh crore of the total. While the funds have been used efficiently so far, the conclusion argues that additional government expenditure could have been higher given the scale of the pandemic's economic impact in India.

1. 20 Lakh Crore Economic Stimulus
By
Divyanshu Kumar Singh
MBA Banking & Finance
Amity University, Mumbai

2. INTRODUCTION
• On May 12, the prime minister Narendra Modi Ji announced a stimulus package
of Rs 20 lakh crore in his fifth address to the nation since the lockdown was first
announced
• The stimulus package amounts 10% of India’s 200 lakh crore economy.
• It includes monetary measures taken by the Reserve Bank of India (RBI) to
improve liquidity
• At roughly $266 billion—on paper—India’s stimulus package is one of the largest
in the world after the US’s (13 per cent of its GDP) and Japan’s (21 per cent of its
GDP)
• This package will give a new impetus to the development journey of the country
in 2020, and a new direction to the self-reliant India campaign”.

3. VISION
AtmaNirbhar Bharat
• The main vision is to make India self-reliant
• Supply chain reform for agriculture
• Simple & clear laws
• Strong financial system
• Capable Human resource &
• Rational Tax system
This is possible through these five pillars:
1. Economy: Quantum jump in the economy
2. Infrastructure: That represents modern India
3. System: Technology driven
4. Demography: Vibrant demography of the largest democracy
5. Demand: Full utilization of power of demand & supply

4. OBJECTIVES
The stimulus package has two key objectives:
• To provide immediate succor to individuals and firms impacted by the
lockdown
• To prepare Indian companies, specifically those in the micro, small
and medium enterprises (MSME) sector, to take advantage of new
manufacturing opportunities in the post-pandemic world.

5. Stimulus Breakdown
March 26, 2020
• The FM Nirmala Sitharaman announced the first package under Pradhan Mantri
Garib Kalyan Yojana on march 26, 2020
• Size of the package was Rs1.7 lakh crore, or 0.85% of GDP
• Benefits under the scheme are:
• Insurance cover of Rs50 Lakh per health worker
• 80 crore poor people given benefit of 5 kg wheat or rice per person for next 3
months
• 1 kg pulses for each household for free every month for the next 3 months
• 20 crore women Jan Dhan account holders get Rs500 per month for next 3 months
• Gas cylinders, free of cost, provided to 8 crore poor families for the next 3 months
• Increase in MNREGA wage to Rs202 a day from Rs182 to benefit 13.62 crore families
• Ex-gratia of Rs1,000 to 3 crore poor senior citizen, poor widows and poor Divyang

6. • Front-loaded Rs2,000 paid to farmers under existing PM-KISAN to benefit 8.7
crore farmers
• Building and Construction Workers Welfare Fund allowed to be used to provide
relief to workers
• 24% of monthly wages to be credited into their PF accounts for next three
months for wage-earners below Rs15,000 p.m. in businesses having less than 100
workers
• Five crore workers registered under Employee Provident Fund EPF to get non-
refundable advance of 75% of the amount or three months of the wages,
whichever is lower, from their accounts
• Limit of collateral free lending to be increased from Rs10 to Rs20 lakhs for
Women Self Help Groups supporting 6.85 crore households.
• District Mineral Fund (DMF) to be used for supplementing and augmenting
facilities of medical testing, screening etc.
• Additional fiscal cost: Rs85695 crore (0.43% of GDP)

7. March 27, 2020
• Liquidity injection by Reserve Bank of India
• Size of the package: Rs3.74 lakh crore (1.8% of GDP)
• Targeted Long-Term Repo Operations (TLTRO): Rs1,00,000 crore for fresh
deployment in investment grade corporate bonds, commercial paper, and non-
convertible debentures.
• CRR cut by 100 basis points to 3%: Reduction of Cash Reserve Ratio (CRR) has
resulted in liquidity enhancement of ₹1,37,000 crores
• Accommodation under Marginal Standing Facility hiked from 2% of SLR to 3%:
Rs1,37,000 crore
• Increased the banks’ limit for borrowing overnight under the marginal standing
facility (MSF), allowing the banking system to avail an additional ₹1,37,000 crore
of liquidity at the reduced MSF rate.
• Fiscal cost: 0

8. April 17, 2020
• Liquidity injection by the RBI
• Size of the package: 0.5% of GDP
• TLTRO 2.0: TLTRO of Rs50,000 crores for investing them in investment grade
bonds, commercial paper, and non-convertible debentures of NBFCs, and MFIs.
• Refinance of SIDBI, NABARD and NHB: Announced special refinance facilities to
NABARD, SIDBI and the NHB for a total amount of ₹50,000 crores at the policy
repo rate
• Easing of Working Capital Financing by reducing margins for loans by NBFCs to
commercial real estate sector, additional time of one year has been given for
extension of the date for commencement for commercial operations (DCCO)
• Fiscal cost to Central Government: 0

9. April 27, 2020
• Size of the package: 0.25% of GDP
• Special Liquidity Facility for MFs: Rs50,000 crore
• Announced the opening of a special liquidity facility (SLF) of ₹50,000
crores for mutual funds to alleviate intensified liquidity pressures.
• Fiscal cost to Central Government: 0

10. May 13, 2020- Tranche 1
• Size of the package: Rs5.94 lakh crore (2.97% of
GDP)
• Collateral free automatic loans to MSMEs, 100%
credit guarantee cover to banks, NBFCs: Rs3 lakh
crore
• Subordinate debt to stressed MSMEs: Rs20,000
crore
• Equity infusion for MSMEs: Rs50,000 crore
• EPF support for 3 months: Rs2,500 crore
• EPF contribution reduced for 3 months: Rs6,750
crore
• Liquidity scheme for NBFCs/ HFCs/ MFIs: Rs30,000
crore
• Partial Credit Guarantee Scheme 2.0 for NBFCs, first
20% loss borne by govt: Rs 45,000 crore
• Liquidity injection by REC and PFC: Rs90,000 crore
• 25% reduction in TDS/TCS rate: Rs50,000 crore
• Fiscal Cost: Rs25,500 crores (0.13% of GDP)

11. May 14, 2020- Tranche 2
• Size of the package: Rs3.10 lakh crore (1.55% of
GDP)
• Free food grain supply to migrants for 2
months: Rs3,500 crore
• Interest subvention of 2% for prompt-payees of
Mudra-Shishu loans: Rs1,500 crore
• Special liquidity scheme to provide Rs10,000
working capital to 50 lakh street vendors:
Rs5,000 crore
• Credit-linked subsidy scheme for middle
income families (Rs6-18 lakh a year)
• Additional emergency working capital funding
for farmers through NABARD: Rs30,000 crore
• Concessional credit to 2.5 crore farmers
through Kisan Credit Cards: Rs2 lakh crore
• Fiscal cost: Rs5,000 crores (0.025% of GDP)

12. May 15, 2020- Tranche 3
• Size of the package: Rs1.5 lakh crore (0.75% of GDP)
• Financing facility for Agri-infra projects: Rs1,00,000
crore
• Scheme for formalisation of Micro Food Enterprises:
Rs10,000 crore
• Funding for fishermen: Rs20,000 crore
• Animal Husbandry Infrastructure Development Fund
to be set up: Rs 15,000 crore
• Policy reforms:
• Essential Commodities Act to be amended to
“deregulate” agricultural foodstuffs and allow
clamping of stock limits on these only under “very
exceptional circumstances”
• Formulation of a central law that will not bind
farmers to sell crop only to licensed traders in the
APMC (Agricultural Produce Market Committee)
mandis
• Fiscal cost: Rs 30,000 crore (0.15% of GDP)

13. May 16, 2020- Tranche 4
• Size of the package: Rs8,100 crores (0.04% of GDP)
• Defence FDI hiked to 74% from 49%
• ‘Make in India’ for Self-Reliance in Defence
Production:
• Notify a list of weapons/platforms for ban on import
with year wise timelines
• Viability gap funding (VGP) for social infrastructure-
• Boosting private sector investment in Social
Infrastructure through revamped Viability Gap
Funding Scheme - Rs 8100 crores
• Social Infrastructure Projects suffer from poor
viability.
• Government will enhance the quantum of Viability
Gap Funding upto 30%
• Fiscal cost: Rs 8,100 crore VGP (0.04% of GDP)

14. May 17, 2020- Tranche 5
• New policy for public sector enterprises, strategic sectors to be
notified in which there will be at least one, but not more than four,
PSEs in addition to private players
• Limit of state borrowings increased to 5% from 3% of GSDP
• MGNREGA gets additional Rs 40,000 crore
• Fiscal cost: Rs 40,000 crore (0.2% of GDP)

15. CONCLUSION
• On the close analysis it is found that government fiscal outlay would be just
around 1.5 lakh crore out of 20.9 lakh crore economic stimulus which is less than
10%
• That means government has not actually given much as additional stimulus fund
to mitigate the effect of corona pandemic on the economy, as their increased
fiscal deficit would be around 3 lakh crore more than previous fiscal deficit
• The additional expenditure due to Covid-19, likely shortfall in tax collections and
increased debt could take India’s fiscal deficit to 6 per cent of GDP in FY21 as
compared to 4.59% of GDP in FY20
• So, out 20 lakh crore the government has actually given 3 lakh crore of additional
fund to help the economy or country fight with this pandemic, rest 17 lakh crore
was already in the expenditure plan

16. • The additional allocation of fund specially in the wake of corona pandemic is less
as compared to other big economies like USA, Japan, Germany etc.
• Most of the sectors are hardly hit by lockdown and almost all the sectors
reported negative growth in the first quarter of this fiscal
• E.g. construction reported a de-growth of -50.3%, Mining 23.3%, Manufacturing
39.3% etc. similarly other industries are also suffering due to lockdown and
people are losing their jobs and are suffering a lot
• So I think an additional government expenditure of 2-3 lakh crore for such a
devastating pandemic is little less from India’s demographic and economic
perspective.
• But, till now funds have been properly utilized to give ration to needy people for
three months & to pay monthly amounts to poor directly into their accounts
• Its proper and efficient allocation can definitely bring back the Indian Economy on
track & so far it has been utilized efficiently so I expect the same with rest of the
amount.