The Finance minister announced the third, fourth and the final tranches of the ₹20 Lakh crore economic package spanning critical sectors of the economy including Agriculture and Infrastructure. Measures were also included for privatization of various activities and improving the ease of doing business. As we enter the fourth stage of the lockdown with lesser restrictions than its predecessors, importance is being given to reviving the economy from what seems to be the steepest slowdown since the great depression of the 1930s.
The Finance minister announced the third, fourth and the final tranches of the ₹20 Lakh crore economic package spanning critical sectors of the economy including Agriculture and Infrastructure. Measures were also included for privatization of various activities and improving the ease of doing business. As we enter the fourth stage of the lockdown with lesser restrictions than its predecessors, importance is being given to reviving the economy from what seems to be the steepest slowdown since the great depression of the 1930s.
Tranche III : Agriculture and Infra
₹1 Lakh crore is proposed to be allocated towards Agriculture Infrastructure. Apart from this, budget has been allocated to help store the produce until it is able to be sold in the market. In the current scenario where the Indian agriculture on an aggregate level has not been profitable mainly due to environmental conditions such as erratic monsoons, warehousing and storage problems,this proposal will enable the farmers in the long run to ensure that perishables are not wasted and are adequately stored until sale.
Several other proposals were announced to help various other initiatives such as beekeeping, herbal cultivation, animal husbandry, fisheries and formalization of the micro food enterprises.The said proposals will benefit the larger variety of various sectors, one has to wait and see how the benefits will reach the intended beneficiaries and how theywill be made aware of these policies.
Tranche IV: Coal, Defence and Space
The fourth tranche concentrated on policy reforms. India has the fifth largest reserve of coal in the world and still imports coal from other countries. To make India self-reliant on coal production and coal mining, the finance minister has proposed that private parties could also compete in the bids towards coal mining activities on a revenue sharing basis. This move will help to generate employment opportunities, increase government revenue, meet domestic demand and also provide access to the sophisticated mining equipment and technology that the private players possess.
Other major reforms that were proposed as a part of the fourth tranche was making India self-reliant in the areas of defence manufacturing, making India a global hub for Aircraft Maintenance, Repair, &Overhaul (MRO) and increasing the participation of private players in space related activities. Since the several defence related activities will now be exposed to private parties, one hopes the government will also take adequate precautions to ensure that security aspects are not compromised at any cost.
Tranche V: Health care, Education and Ease of Doing business
The finance minister expressed that several of the reforms and relief measures are part of the recent budget as well as extension of the same and it will benefit the nation at large.As a part of the final tranche, the finance minister proposed many governmental reforms and enablers towards different sectors such as healthcare, education, ease of doing business, among others.
The FM has proposed increased investments in the health sector such as health and wellness centres in Urban and Rural areas and integrated public health labs in all districts and block level labs and public health units to manage the pandemic. Recently, the WHO has said that the virus may be there with us for a reasonably long period. It thus becomes imperative to ensure that we are geared up for all contingencies and the government has rightly thought about this and now investments are proposed to be made accordingly. The timelines and the execution details need to be understood.
When migrant workers will come back to work?
₹40,000 Crore allocated towards MNREGA will substantially help to reduce the burden of the unemployed rural population. Though, this is a great step by the government to ensure the well being of the migrant workers, various industries in the country, especially the construction, textile industries are heavily dependent on the migrant workforce to come back to work. The delay in the return of migrant labour will not only have an adverse impact on the cost of the production, but also on the completion timelines as well.
Another announcement the finance minister was that the default during the time of COVID for the companies will not be considered as default under the Insolvency and Bankruptcy Code(IBC) and increased the threshold limit to initiate proceedings under IBC from Rs 1 lakh to Rs 1 cr which will be a good relief during this testing time.
The government is leveraging technology in the education space as well, providing separate channels for each class from Class 1 to 12 and special e-content for students with visual and hearing impairment among other announcements related to the education sector. These steps will not only help during the pandemic but will also ensure that quality of education imparted is consistent across the country even after the crisis.
Ease of doing business:
Decriminalization of the Companies Act is an extension of what was announced during the Union budget and FM indicated that same will be brought by way of an Ordinance.
Medically COVID does not have a cure as it is a virus - health care professionals provide adequate support to the sick and then the human immune system does the rest. For example, in a critically ill patient, the ventilator takes the burden off the lungs and allows the lungs time to recover while it functions by providing oxygen to the body instead of the lungs. Some patients need this level of support while others need oxygen and still others may only be suffering from fever and cough. The analogy used here is that a fiscal stimulus could be compared to the ventilator.A monetary stimulus is akin to nutritious food given to ensure that the patient gets strength from the nutrition and improved immunity. Exercise and physiotherapy ensure that the physical body of the person i.e., his muscles and bones are kept strong. This is akin to the structural and policy reforms announced by the government. All the three are vital to live a healthy, long life.Several policy reforms, fiscal and monetary reforms have been proposed by the government as a part of the package, and we will have to wait and see how the benefits of these reforms percolate to the common man, thus reviving the economy.