NEW DELHI: The mega Rs 20 lakh crore ($260bn) stimulus
package announced on Tuesday by Prime Minister Narendera Modi includes
previously announced measures to save the lockdown-battered economy, and
focuses on tax breaks for small businesses as well as incentives for domestic
manufacturing. The combined package works out to roughly 10 per cent of the
GDP, making it among the most substantial in the world after the financial
packages announced by the United States, which is 13 per cent of its GDP, and
by Japan, which is over
21 per cent of its GDP.
The Rs 20 lakh crore package includes Rs 1.7 lakh crore package of free foodgrains to poor and cash to poor women and elderly, announced in March, as well as the Reserve Bank’s liquidity measures and interest rate cuts. While the March stimulus was 0.8 per cent of GDP, RBI’s cut in interest rates and liquidity boosting measures totaled to 3.2 per cent of the GDP (about Rs 6.5 lakh crore).
“A special economic package is being announced to make
India self-reliant,” Narendra Modi said in his third address to the nation
over COVID-19 pandemic. “This package, taken together with earlier
announcements by the government during COVID crisis and decisions taken by RBI,
is to the tune of Rs 20 lakh crore, which is equivalent to almost 10 per cent
of India’s GDP.”
Top UN economic experts have hailed as “impressive” the Rs 20
lakh crore stimulus package, the largest so far among developing countries,
announced by India to revive the country’s economy, which has been severely hit
by the coronavirus-triggered lockdown.
Prime Minister Narendra Modi on Tuesday announced massive new financial incentives on top of the previously announced packages for a combined stimulus of Rs 20 lakh crore (USD 260 billion).
While launching the World Economic Situation and Prospect (WESP) report update on Wednesday, Chief of the Global Economic Monitoring Branch Hamid Rashid told reporters in response to a question that the stimulus package announced by the Indian government on Tuesday “is a very welcome development.”
He said the Rs 20 lakh crore package, which is 10 per cent of India’s GDP is the “largest so far in the developing countries” because most developing countries have been rolling out stimulus packages that are between 0.5 per cent and 1 per cent of the GDP.