The word COVID would surely remain the most frequently used word for a few years. It has initiated many an action by all governments on a number of fronts. The challenge is obviously one of getting the economy back on the rails. Over five sessions (followed by an equal number of PPTs), our Finance Minister outlined the package of measures, both on financial outlays and reforms. The financial outlay covers immediate reliefs in cash and kind to alleviate the pressing problem to migrant worker front and the health sector. The medium and longer-term outlays addresses opportunities and challenges on a number of fronts. Of equal importance are the reforms planned over the next few months to make the Indian business environment friendly to a post COVID world.
This article ( followed by a few more ) attempts at understanding the implications of the Rs 20.97 Lakhs Atmanirbhar Package, as the Prime Minister labeled it.
First off ( Graph 1), of the Rs 20.97 L.cr ( Lakh crores) , RS 8.03 L.cr pertains to measure s taken by the Reserve Bank of India to ensure “Liquidity” in the Banking system . Owing to COVID, borrowers (businessmen and Farmers alike) would find it difficult to service their loans ( through interest) or repay their loans. This is turn would impact the Banks and Non-Bank Finance Companies’ capacity to lend and grow. To ensure that their “liquidity” ( to lend) is not impaired, the RBI has set in place a slew of measures that would inject ( if required) upto RS 8.03 Lakhs into the Banking/Non-Banking Finance system. This is in no way a grant, but the money that needs to be repaid to the RBI.
That leaves RS 12.95 L. cr of funds that the Centre proposes to make available. Of this amount, the immediate outlay is Rs 0.19 Lakh cr ( Graph 2), and the balance Rs 12.76 L.cr is over a longer period. The immediate outlay of Rs 0.19 Lcr ( or Rs 18,500 cr), comprises of Rs 3500 cr in the form of cash and foodgrains for migrants across the country. This would continue until the end of June. The balance Rs 13, 500 cr is towards all that needs to be done on the Health front to fight the COVID.
