Where the aid and stimulus package falls short – editorials
Announcement was made on Sunday of the final delivery of the £ 20 crore relief and stimulus package from India to provide aid to people and businesses affected by coronavirus (Covid-19) disease and the closure, and to revive an economy that will shrink this year, up to 5.2%, according to an estimate.
The need of the hour was money in hand. It is the reason why the $ 2 trillion stimulus package announced by the United States (USA), with 10% of GDP, which is almost the same proportion as India (₹ 20 lakh crore equals just under 10% of India’s GDP), is a good benchmark. Nearly $ 600 billion of the $ 2 trillion is payments to individuals, and leaving unemployment benefits and student loan forgiveness aside, an estimated $ 300 billion in cash was part of the hole. Other $ 340One billion went to state and local governments, largely for their Covid-19 response. In addition to this $ 2 trillion package of CARES (Coronavirus Aid, Aid and Economic Security) there were approximately another $ 800 billion in emergency fiscal measures and $ 4 billion in monetary measures. It is not just the United States; Even the UK package has a significant fiscal component, which includes wage support for self-employed and salaried (but unlicensed) employees for three months (up to £ 2,500 per month).
Interestingly, many in the United States believe that more is needed. To be sure, the United States has been devastated by the pandemic. India is relatively better. Even if that were taken into account, the fiscal cost of the India package is around one-tenth of Rs 20 million. There have been no substantial cash donations, especially to the middle class (who did not receive cash), even though it is the key to reviving discretionary spending. There has been no income support or salary protection for companies, and this could lead to a wave of layoffs at India Inc, further depressing sentiment and demand for births. There has also been no cash directed to states, although the Center has noted that so far they have only borrowed 14% of the amount to which they are authorized (most states are concerned about loans because their incomes have been affected ). Without a doubt, the package has included a series of announcements about reforms, including some radicals. Some of these were previously announced but not implemented; but others are new and welcome. However, it is unlikely that these will immediately improve the financial situation of individuals and companies, which is the main objective of any stimulus package.