33 minutes of Modi- A new threat to economy?

'Globalistaion was never the way to see India developed is what people have started believing now. Strange, isn't it? With PM Modi declaring the Aatma Nirbhar package of Rs 20 lakh crore in the midst of the coronavirus, and also urging people to use more of the local products, the Modi lovers have as if pledged to be self reliant keeping the brains aside.

 

Let's be clear! This is not PM Modi's personal funds. If he announces some package out of the tax payers money, in this case 20 lakh crores, don't you think he needs to explain to us- how? from where? Shouldn't he be clear and transparent and stop talking vague at least now? As far as I remember, the country was facing a major economic slowdown and suddenly the world had to cease working off the coronavirus spread. When these back to back major problems have popped up, how it is that PM Modi thinks to benefit the Shramiks, MSME businesses, industries, middle class, almost all the citizens in short?

 

 

Calculating the figure then, if Rs 20 lakh crore is divided by the total population today 135.26 crores, every citizen is to get around Rs 15,000 (round figure) in hands. But, wait, did PM say anything about how the amount would be given? Ohh, again a piece of vague talk.. Getting serious, Modi’s 33-minute address was long on lofty goals and actually short on details.The package is larger than the one several economists had proposed in recent weeks. Arvind Subramanian, former chief economic adviser, had said a Rs 10 lakh crore package would be more than adequate. Former RBI governor Raghuram Rajan had suggested a more modest sum of Rs 68,000 crore during his recent interaction with Rahul Gandhi.

 

Modi has offered to put together a mountain of funds totalling roughly 10 per cent of the country’s nominal GDP of Rs 203.84 lakh crore in 2019-20. If delivered, this would compare well with the US stimulus that is estimated at 13 per cent of its GDP. Wondering why the government has hesitatingly brought out the stimulus package. While the details are still awaited, the options before the government would be a combination of increased borrowing, printing of notes and an increase in the fiscal deficit.

 

Further we need to know the nature of the stimulus, over what time frame it would be implemented, to comment upon. However, increasing the taxes at this stage would be a bad idea as when we are looking to prop up the economy, taxes, both direct or the indirect, would further slow down the economy. Also any infrastructure push would take several months to get off the board and we need to know the full contours of the stimulus to understand it.

 

Another significant announcement he made was in relation to being Vocal for Local products. Without using the term 'swadeshi', Modi said during his address to the nation that locally made products had taken care of the needs of the people during the coronavirus pandemic and asked citizens not to give them up. But didn't he forget to mention that India had imported controversial antibody test kits from China and that the country still depends heavily on other countries for active pharmaceutical ingredients.

 

Modi’s thrust on the local sits easy with the RSS’s views. The Swadeshi Jagran Manch has been urging people to reject Chinese goods. On Tuesday, Manch chief Ashwani Mahajan hailed the Prime Minister for promoting self-reliance and swadeshi products. While Nehruvian self-reliance tapped into modern technology and was driven by science, the Sangh brand derives its inspiration from a perceived glorious past. The RSS has for decades been tom-tomming the greatness of India’s age-old economic model and yearning that it would once again become a world leader.

 

'Vocal for Local' is the smartest way he opted to lock India off globalisation and promte the 'Make in India' policy together. With this there's a big problem for those businesses who expanded their venture in India aligning to a huge market. Wonderment, why did he not think that this move may affect the foreign reserve status of India and touch the foreign direct investment abstraction? Probably a new threat to the Indian economy!