Relief and Reform

Context – Present economic crisis is worse than Asian financial crisis and global financial crisis of 2008-09, impacting both supply and demand side of the economy. Government’s stimulus package is addressing both demand and supply side issues.

Objective of Govt’s stimulus package

• Minimise the human cost of the crisis for the people at the bottom of the pyramid.
• Convert crisis into opportunity by implementing bold structural reforms.

Govt response on supply side

• Agriculture reforms: to ensure food security and pump Rs. 78000 crores in the hand of farmers.
• Liquidity infusion: to prevent insolvency and bankruptcies.

• MSME: Additional credit line of Rs 3 trillion without any fresh collateral was extended. It can also avail of new equity from Rs 50000 crore fund of fund and take advantage of debt facility.
• State Electricity: Rs 90000 crore credit package for DISCOM.

• Private Producer in both manufacturing and agriculture

• Reforms related to APMC: Provides freedom to farmer choose clients and for traders and exporter to maintain necessary stocks.
• Private Sector will get a boost after liberalisation measures in defence exports and production.

• Rs. 10000 credit to more than 50 lakh families, street vendor all over country for re-stocking and use as working capital.

Govt response on demand side

• Aggregate Demand: Comprises of consumption, investment, and demand for intermediate goods.

• Additional credit lines provided to MSMEs, vendors or farmers will contribute to the strengthening of aggregate demand

• 1.73 lakh crore rupees for direct transfer in Jan Dhan Account.
• Rs. 40000 crore additional allocation for MGNREGA, Rs. 30000 crores for construction workers, Rs 17,800 crore for farmers.
• Rs. 50000 additional income as TDS and TCS were reduced by 25%.