Modi announces $266 billion package to boost coronavirus-hit Indian economy
By Iqbal Abhimanyu
New Delhi, May 12 (efe-epa).- Indian Prime Minister Narendra Modi on Tuesday said his government would pump in $266 billion into the Indian economy to help mitigate the effects of the crippling coronavirus lockdown and make the country self-reliant.
The package, equivalent to around 10 percent of India’s GDP, includes stimulus announced previously by the government and the Reserve Bank of India during the lockdown that began on Mar. 25 and has nearly brought the economy to a grinding halt.
“I announce a special economic package today. This will play an important role in the ‘Atmanirbhar Bharat Abhiyan’ (efforts to make India self-reliant). The announcements made by the government over COVID, decisions of the RBI, and today’s package total to 20 trillion Indian rupees,” Modi said in a televised address to the nation.
He said Finance Minister Nirmala Sitharaman would announce further details of the package in the next few days.
The overall package includes relief for farmers, workers, cottage industries, and small and medium-sized enterprises “who pay taxes sincerely and contribute,” he said.
“The 21st century is India’s century. (…) The current world situation tells us that the only path to this (dream) is self-reliant India,” the prime minister said.
Praising the government’s efforts to distribute aid and subsidies to the poor and farmers with the help of technology, Modi said reforms undertaken during his tenure of the last six years had made India better prepared to handle a crisis.
“India has turned the crisis into an opportunity,” he stressed, citing the example of the production of PPE kits (protective gear for medical workers) and N-95 masks, which, he said, has now gone up to 200,000 units per day from almost nothing before the crisis.
The prime minister repeatedly emphasized the importance of strengthening local supply chains, manufacturing, and markets, appealing citizens to buy and promote local products.
Modi indicated that a fresh round of “bold” economic reforms could ease laws related to land acquisition and labor and modify the tax system to attract investment and boost the economy.
This is the second direct stimulus package announced by the government during the COVID-19 crisis after announcing a $22.5 billion plan in late March for providing direct cash transfers and food security to millions of poor people hit by the nationwide lockdown.
In April as the government extended the lockdown, India’s central bank announced fresh liquidity worth 500 billion rupees ($6.55 billion) to financial institutions through the Targeted Long Term Repo Operations scheme.
The prime minister also indicated that the lockdown measure to contain the spread of the coronavirus could be further extended, but with more relaxations.
“Lockdown-4 will have new rules, we cannot let our lives be ruled by the coronavirus. All information on the lockdown 4 will be given before May 18. We will fight coronavirus, but we will also move forward,” he said.
This was Modi’s fifth address to the nation during the coronavirus epidemic that has infected more than 72,500 patients and claimed nearly 2,350 lives in India.
The lockdown, suspension of transport, and the closure of most businesses have triggered an unprecedented humanitarian and economic crisis in the $2.9-trillion economy, which was already weakening before the lockdown, with the highest unemployment rates in decades.
Modi’s announcement came on a day when the government said India’s manufacturing output had contracted by more than 20.6 percent mainly due to the closure of almost all economic activities for more than six weeks.
Hundreds of thousands of migrant workers have been struggling to return to hometowns in recent weeks as incomes have dwindled and jobs lost, with many of them having to walk thousands of kilometers and facing hunger, accidents, and police restrictions on their way.
Experts have warned that it could take months to revive industrial production and other economic activity due to the lack of liquidity, demand, and possible lack of workforce. EFE-EPA