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Fact Checking India’s Economic Stimulus

Ideally speaking, relief measures for the MSME should have been announced in April or during the early period of the lockdown. Sadly, very little of our immediate or short-term concerns have been addressed in the stimulus. More short-term measures would have helped the sector gain better perspective and plan better for the post lockdown period. Furthermore, considering all facts and figures, the actual cash flow back into the industry segment is only 1.1% of GDP with another 1.7% being conditional. Rest is only liquidity measures. The 20 Lakh crores in reality is not actually flowing through the system. Having said that, our concerns do remain considering we have huge financial obligations facing our businesses. We are still in lock down in many parts of the country even though some businesses have just started in orange and green zones. Raw material prices also still remain high and is a significant concern for us.

The stimulus package of Rs. 20 Lakh Crore announced by Union Government of India on 20th May, 2020 is expected to rebound the economy of India, effected by Covid-19 Virus. As a Micro enterprise entrepreneur my objective views on the stimulus are as follows:

  1. The announcements consisted of earlier budgets’ allocations of 2019 and 2020.
  2. Liquidity injection/Revenue allocation of RBI of 8 Lakh Crore is included as Fiscal stimulus.
  3. Approximately 2 Lakh crores is the actual fiscal stimulus.

Positive Steps:

  1. Rs. 40,000 Crores Allocation to MNREGA is a great step to boost the Rural economy.
  2. Rs. 3,500 crores for immediate relief for migrant labourers of Informal economy.
  3. Loans norms for MSMEs are the first step in the right direction.
  4. Agriculture reforms will expand markets and reduce food wastage.

Expected Steps:

  1. Banking sector Not in sync with Government policies. MSMSE not benefiting with most policies.
  2. Rather than providing loans, Manufacturing infrastructure should be set up by Governments and leased out to manufacturing companies.
  3. Direct transfer of money to economically poor.
  4. Comprehensive setup of Health Infrastructure, right upto Primary Health Care Centres.
  5. Funding of Pharma companies and comprehensive partnership with CSIR labs for the development of medicines and health technologies, not only IT.
  6. Innovations in Packaging companies should be funded through banks to scale up.
  7. Scaling up micro and medium manufacturing enterprises through stages and adoption of technologies like Solar, IT, and Nanotech through SIDBI with a special panel of Independent experts (to be rotated every 6 months)

Author: Pranay Kumar

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