FM Nirmala Sitharaman
FM Nirmala Sitharaman
PTI

Many experts termed this Rs 20 lakh crore economic package announced by finance minister Nirmala Sitharaman as a long-term package and doesn't give money in the hands of people. Meanwhile, in the latest report of global research firm, AB Bernstein, called the economic package a “lost opportunity”.

The report pointed out, "The plan in our view, was a general economic agenda and lacked substantive decisions to support consumption, promote manufacturing and even the broader reforms lacked the spark while urban and corporates (irrespective of impacts) were ignored." It claimed that equity markets are likely to be less enthused because the economic package does not look at boosting short or medium term economic growth.

"Our GDP forecast of (-) 7 per cent for FY21, and portfolio remains unchanged," AB Bernstein stated.

The research firm stressed ideally the focus should have been on urban, corporates, consumption, infrastructure and impacted sectors. But the firm stated strangely it was on rural and 'strange end markets' such as space programme. "Rural is in control, as farm incomes are protected (good harvest season and good start to summer crop sowing). Yet, several measures (in the form of loans) were announced for agriculture, some of which are already existing programmes."

The firm stressed that broader reforms also lacked spark. Reforms that announced were domestic defence production; commercial coal mining; plan to reform APMC – allowing farmers to sell produce directly to anyone without geographic constraint; privatisation of discoms in union territories; and plan to limit PSU presence in some sectors. The report asserted not much was discussed on land, labour reforms, tax rationalisation or on any coherent plan to invite foreign manufacturing. "Government's defence indigenisation plan is not new and has been poorly executed in the past and so is the case with commercial mining for coal. APMC plans are good but also need support from states. Discom plan is insufficient." The Indian government has not provided the fiscal math and there is lack of clarity on the impact of some measures on fiscal deficit, the report stated.

Terming 'commercial coal mining' as rehash announcement, the firm added, "We also believe that while blocks may be auctioned actual commencement of mining may take a few years (four-five) to commence given land acquisition, environment challenges etc.

Commenting about the defence programme, the research firm stated public sector units in Defence do not have an incentive to localise or scale up the technology curve. "Hence, have high import levels and always depend on foreign vendor for new product cycles."

Power distribution privatisation in union territories is a small step, as there are only a few union territories. Recalling Uday scheme, the firm stated not much was achieved.

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