A Diwali package to go with our revival spirit2 min read 13 Nov 2020, 02:20 PM IST
The final contours of India’s Atmanirbhar programme now appear in place. It bears only a slight Keynesian imprint and relief efforts have been combined with long-range policy shifts
The government’s keenly-awaited third round of stimulus under its Atmanirbhar Bharat rubric took the form of a Diwali package two days before the festival. On Thursday, finance minister Nirmala Sitharaman announced a slew of measures aimed at stimulating our economy, which can now technically be said to be in a recession. By the central bank’s latest estimate, output contracted 8.6% in the second quarter of 2020-21, following an almost 24% shrinkage in the first. The current quarter was expected to catch up with last year’s level, but there was no getting away from the need of a fiscal boost. By way of spending, the Centre set aside extra funds to the tune of over ₹1 trillion for urban housing, fertilizer subsidies, rural employment and other initiatives. It revived an earlier provident-fund subsidy, giving it a two-year run, offered a few new tax concessions, and also expanded its backing of collateral-free loans, a scheme that made its debut in May, to cover 26 covid-stressed sectors identified by the K.V. Kamath panel for relief (plus healthcare). This programme was extended till 31 March, with its eligibility cap lifted and repayment period stretched to five years. With Wednesday’s extension of a production-linked incentive (PLI) scheme to 10 “champion" sectors also taken into account, it became harder to argue that the government was neglecting the heavy lifting needed for India to exit its economic rut.