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Finance minister Nirmala Sitharaman. (Bloomberg)
Finance minister Nirmala Sitharaman. (Bloomberg)

Opinion | Balancing diverse needs and multiple expectations

The package seems attractive from vantage positions, but falls short of expectations

The Prime Minister’s fifth address to the nation since the outbreak of covid-19, held out a promise for the revival of the Indian economy with a critical focus on self-reliance. The announcements made by the finance minister takes the assurance of the Prime Minister logically forward and need to be seen as the first step in a series of announcements that the government is likely to make over the next few days. This narrative attempts a reflection of the finance minister’s ‘first cut’ of the package from the ‘prism’ of a student of the political economy.

How does one perceive the steps taken so far if one were to adopt a ‘bottom-up’ approach to economic revival on the one hand, and a strong pitch at self reliance on the other? The package announced thus far, seems to be attractive from some vantage positions, but clearly falls short of expectations. Even as we continue to remain in a state of lockdown, the element of uncertainty on what is likely to unfold in the days ahead, makes the package announced more as a ‘mild balm to deal with difficult times’ rather than as a serious boost towards any visible economic revival.

The range of concessions offered to MSMEs are commendable. Right from the proposal for ‘collateral free’ loans to re-defining of what constitutes an MSME, has been broadly welcomed. One needs to look at the larger picture in terms of the rate of interest on these loans and what benefit can those enterprises, which are now classified as MSMEs, derive at this stage of ‘economic deprivation’. Is this a concession too late in the day and comes much at a time when the ‘crisis’ that enterprises faced, have moved much beyond the mere question of their classification? Yet another question is the healthy scepticism expressed in some quarters that much of these grand plans would get watered down in the way a conservative bureaucracy and insensitive administrative apparatus on the ground, implements the same. Some also hoped that these reforms will see a partnership from the state governments and not get caught in political cross fires.

The concessions announced to the power sector, rightly recognise that companies would benefit from it only if the said benefits are passed on to the consumer. One would have hoped that a similar provision was made with regard to the MSMEs. During lockdown, much of the retrenchment in the work-force has been seen for MSMEs and the un-organised sector. Towards the end of the lockdown, if migrant labourers seek to return to their home states, it is inherently because their employers did not feel it necessary to take care of their interests during the lockdown. The concessions given to the MSMEs hold no guarantee that the benefits will go down to their workers, save for pious assurances from the captains of this sector that “we definitely will pass on the concessions as we cannot survive or revive without the active engagement of the workforce". One hoped that this sentiment had been remembered and implemented at the start of the lockdown. It would then have been easier to deal with the revival as the lockdown gets lifted in phases.

While it can be argued that the first round of the package focused largely on MSMEs, it would have been useful if the package had also addressed the needs of those who have been impacted most severely by the lockdown – the middle class and the economically marginalized. One may say that ‘picture abhi baaki hai’ (the full story is still to unfold), the trailer must hold some hope for those who need the support of the government the most. Possibly, the announcements in the coming days will provide that much-needed economic balm.

Sandeep Shastri is a political analyst who is pro vice-chancellor of Jain University. The views expressed are personal.

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