Not walls, but many more windmills

The Economic Times     16th May 2020     Save    

Context –  20 Lakh crore stimulus package promises to be booster shot, a catalyst to spur growth, accelerate job-creation and alleviate poverty.

Stimulus should have five elements: 

  • Direct cash injection to households (e.g., PM-KISAN Yojana).
  • Significant fiscal spending.
  • Credit guarantees (e.g., for MSMEs). 
  • Liquidity support (e.g., RBI support for NBFCs, mutual funds, etc). 
  • A Keynesian large infusion on infrastructure.

FICCI suggestion to revive Economy

  • Direct infusion of 2 lakh crore in a ‘Bharat Self-Sufficiency Fund’: potentially generating five times that amount.
  • Collateral-free loans for MSMEs with government guarantee. The `3 lakh crore package should help bring back to life a large proportion of MSMEs.
  • For the six crore MSMEs employing 11crore people: focus must be on liquidity, quality, capability enhancement and market access. 
  • Additional lines of credit for NBFCs and MFIs will aid MSMEs. The change in the definition of MSME will also be a facilitator.

Atmanirbhar Abhiyan should have following components.

  • Additional liquidity to vulnerable sections of society.
  • Introduce national floor wage for all workers.
  • Extend MGNREGA to enrol migrant workers.
  • Extend social security fund for unorganised sector as well as gig workers.
  • Provide special credit facility for street vendors, etc.

Health

  • Strengthen healthcare infrastructure, enable universal access, increase the number and better the quality of healthcare workers, and use the strengths of digitalisation and R&D to make India a healthy nation.

Corporate Sector

  • Covid-19 liquidity bridge for providing guarantee to banks.
  • Conscientious capitalism will help India rise out of this crisis and make it a truly inclusive nation.

Way Forward

  • As the Chinese saying goes, ‘When the winds of change blow, some build walls and others build windmills.’ 
  • India needs to build digital, technological, ecological windmills. And windmills generating more empathy. India needs to build digital, technological, ecological windmills. And windmills generating more empathy.