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-Rajeev Kumar (Editor-in-chief)

Friday, November 13, 2020

Stimulus 3.0: Good, Odd, & Not Enough

The good thing about the stimulus package announced by Finance Minister Nirmala Sitharaman on Thursday is that the government is open to the idea of a stimulus. But it would have been much better news had immediate impact not been limited. Of ₹2.65 lakh crore support announced on Thursday, ₹1.46 lakh crore is for the production-linked incentive (PLI) scheme, whose funds will trickle into the economy over a period of years, meaning the current stimulatory effect is slight. The ₹6,000 crore equity infusion in the National Investment and Infrastructure Fund’s (NIIF) debt platform is, again, a good idea, for the future. Its immediate impact is slight. The ₹65,000 crore increase in fertiliser subsidy is puzzling: why increase input subsidy when market-oriented farm reform calls for expanding generalised income support and investment in farm and farm-market linkage infrastructure? And how does that stimulate the economy?


The additional outlay on rural employment is a genuine boost to rural consumption, the outlays on housing and industrial and defence infrastructure would add to investment. More income-tax breaks for housing will skew saving choices in favour of one kind of saving, which is suboptimal. The ₹3,000 crore for project exports could also help in the medium term — India’s credit lines to foreign countries have a track record of taking forever to translate into disbursals. The rozgar yojana is well-intended but needs to be supplemented. But it has flaws. It should have been more thought out so as to ensure that employees are unable to siphon money in the form of a scam. The extension of the emergency guaranteed credit scheme for micro, small and medium enterprises (MSMEs) is welcome, but not the retention of the conditionality that has constrained loan eligibility.


The economy is in recession. It needs investment, not subsidy tweaks. State-funded and State-guaranteed investment in shovel-ready projects is the priority. Let’s have some real action, please.

Courtesy - The Economic Times.

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इस वेबसाइट को जारी रखने में यथायोग्य मदद करें -

-Rajeev Kumar (Editor-in-chief, Sampadkiya.com)

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