They say proof of the pudding lies in its eating. Well, the Prime Minister’s banner headline-making promise to commit a humungous Rs. 20 lakh crores to the second post-COVID-19 economic package in his broadcast on Tuesday evening needs to translate into actual reality for it to have the intended effect on growth. He did not go into details, leaving it to Finance Minister Nirmala Sitharaman to unveil the distribution of the package among various segments of the economy. But the country can savour the sheer promise of as much as 10 percent of the GDP being earmarked for post-coronavirus reliefs and booster-shots for various sections of the population and economic growth. The Opposition and several economists had called for 5 percent of GDP to be earmarked for the economic revival, post-corona. Modi has granted their wish, doubling the size of the package to 10 percent of GDP. One is yet to see the same Opposition leaders say a word in thanks, though captains of industry and commerce have hailed the package in most glowing terms.
Of course, it is wise to keep one’s fingers firmly crossed for often in these things there is a huge gap between promise and delivery. Given the prime minister’s penchant for alliteration and rhyming of words, Rs. 20 lakh crores in 2020 does sound good on the ears. Another theme he sought to hammer home through his 34-minute address was self-reliance. Again, here he could not avoid rhyming about going ‘vocal about local’. Hopefully, aatmanirbharta which he stressed repeatedly, does not mean closing off on the world and going back to the wasteful decades of the Nehruvian India when in the name of self-reliance shoddy products were sold to Indians at prohibitively high prices. Remember the three companies manufacturing a limited number of passenger cars and each commanding a hefty price in the black market. We are better off allowing foreign auto-makers to set up shop here and offer Indians a huge variety of choice in price and comfort and luxury in their vehicles. The point is that the door on global technology, capital and even global companies ought not to be shut in the name of self-reliance. Repeated appeals to Indians to buy local, one suspects, would primarily suggest that we should shun Chinese goods which have flooded the local markets. If that indeed is the case, it should be welcome, especially given the routine manner in which even the most successful Indian companies with considerable brand value source their products from China. They need to be encouraged to go local and manufacture at home. We are unable to see why most of the electronic goods, for instance, including such things as fans, TVs, ubiquitous set-top boxes of various direct-to-home service-providers, etc., have to be imported. There are myriad other things where Indian entrepreneurs have taken the easy recourse to imports rather than manufacturing them locally. If Modi’s emphasis on self-reliance helps paring down such low-tech imports it would not only generate employment but would help preserve foreign exchange.
However, no less significant was the promise to reform the labour, land and capital sectors to facilitate fresh domestic and foreign investment. Despite excess liquidity in the system, despite repeated cuts in the interest rate by the RBI and constant nudging that banks should lend more, there has been little demand for credit from business and industry. In coming days, we would know what shape the long-awaited reforms in the above key sectors of the economy emerge from the central and State governments. The Prime Minister was concerned about the welfare of crores of self-employed people who are called upon to bear hardships due to the corona disruption. Though Sitharaman late on Wednesday afternoon addressed a press conference to give details about the PM’s package, we will wait for a closer look before passing judgment. For the record, the PM mentioned all the right things needed to boost growth, namely infrastructure, tech, proper supply and demand and a positive demography. Meanwhile, he left it for later as to what would follow at the end of the third phase of the lockdown on May 17.
We cannot but acknowledge the fact that if the promised reforms in land, labour and capital are carried out, this alone would help transform the economy. While doing so, Modi will face resistance from sections of the RSS-BJP, but he should stay the course in his resolve to change the face of the economy. Self-reliance above all should mean faster industrialisation, something we had ignored due to in-built obstacles and ideological blinkers. We need to press ahead with all necessary measures to boost growth with all our reformist guns blazing. At least, the prime ministerial broadcast did arouse that hope.