Vision 2020, Rs 20,00,000 crore: Not just massive, signals a sea-change (Indian Express)

Mains Paper 3: Economy
Prelims level: Rs 20 lakh crore package
Mains level: Impact of Rs 20 lakh crore package for economic revival

Context:

• Even the standards of the stimulus package in developed nations like the US, Prime Minister Narendra Modi’s Rs 20 lakh crore package – this includes the Rs 4-4.5 lakh crore of liquidity boost by the RBI – is not just massive, it signals a sea-change in the way the country is to be governed.
• There are, as yet, no details of the package, but Modi promised sweeping reforms to ensure, as he said, the 21st century belongs to India.
• We will be careful about corona, he said, we will wear masks, we will observe ‘do gaz ki doori’, but our lives can’t just be about corona.

Key highlights about the speeches given by Prime Minister:

• The 20th century, he said, began with the Y2K problem that had the world in panic, and it was India that solved the problem.
• Though India has not found a ...................................................................

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Final package:

• Announced by Finance Minister, it will likely be much smaller than what the PM announced – apart form the RBI’s stimulus, some part will probably be guaranteeing bank loans to producers.
• But a good way to judge its size is to juxtapose this with the expected collapse in the economy.
• The most pessimistic estimate is a 5% real contraction in growth; Modi’s package, then, seeks to overcome that and ensure there is a small positive growth in the year.
• As expert after expert has said, it is critical that the economy doesn’t stall/contract as reviving businesses – and livelihoods – after they have shut is very difficult.

Focusing on local:

• In a world where isolationism is the new mantra, thinking local means higher import tariffs and other forms of protection; in other words, a high-cost economy.
• If India is to develop global brands, PM message has to be sweeping reforms to lower costs in the country, whether by way of flexible labour laws, improved infrastructure, a more welcoming environment.
• If, industry doesn’t become more competitive, the loan guarantees that will be part of the package will become a dead weight as firms won’t be able to repay them; if firms like Vodafone Idea shut down, as they will without slashing government levies, ‘local’ can’t take off; having more ‘local’ oil or mineral production, similarly, requires slashing exorbitant government levies and fast-tracking environmental approvals.

Way ahead:

• Also, even if the cash component of the package is Rs 5-8 lakh crore with RBI liquidity, loan guarantees, tax and license fee giveaways forming the rest.
• It will send bond-holders into a tizzy and also make rating agencies relook their India outlook; more so, since there will be a big shortfall in both central and state tax collections this year. In other words, Modi’s ...........................................

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Conclusion:

• Markets will weigh the details over the next few days but, for now, Modi has shown he has the guts to take big decisions.

Online Coaching for UPSC PRE Exam

General Studies Pre. Cum Mains Study Materials

Prelims Questions:

Q1. With reference to the Pulitzer Prize, consider the following statements:
1. The Pulitzer Prize is an award for achievements in newspaper, magazine and online journalism, literature, and musical composition in the United Kingdom.
2. In 1937, Gobind Behari Lal became the first Indian to win a Pulitzer and he won the award in the reporting category.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer: ...................................

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Mains Questions:
Q1. Describe the economic impact .....................................................?