The mega economic package to counter the financial fallout of the coronavirus crisis announced by Prime Minister Narendra Modi on Tuesday evening has been modelled on the one announced in UK this March. The announcement of a Rs 20 lakh crore package -- the details of which are yet to come -- was made during an address to the nation on Tuesday evening, in which the Prime Minister also spoke of "lockdown 4.0", indicating that it will have very different rules.
The UK's 30-billion-pound fiscal stimulus has dished out big chunks to the labour market and the healthcare system and was followed by another 330 billion pound guaranteed loans to businesses.
Sources said the long-awaited economic package announced by the Prime Minister on Tuesday will be on similar lines, paying wages for the firms and MSMEs (Micro, Small and Medium Enterprises) which retained their labour force. Top sources said it would be a comprehensive package for all sectors.
In his address, the Prime Minister said, "The package will focus on land, labour, liquidity and law; it will help small business, labourers and farmers. It will focus on the well-being of migrant workers too". It would cater to various sections including the cottage industry, MSMEs, the middle class and industries among others, he added.
Finance minister Nirmala Sitharaman, who is heading the task force formed to study the economic fallout of the pandemic and provide a solution, will give the details of the package, the Prime Minister said.
Rs 20 lakh crore package -- which also includes the 1.7 lakh crore package announced in March -- was a tenth of the nation's GDP and will provide fresh boost for a "self-reliant India", the Prime Minister said.
The countrywide lockdown, which is in its seventh week, is expected to put a huge dent in the economy, which has been undergoing a slowdown for months. Now, with industry grinding to a halt and revenue drying up, the fiscal position of both Centre and the states have become precarious.
The pressure has pushed the states to ask for an economic package and a bigger share of the revenue. The demand was repeatedly underscored at the meeting between the Chief Ministers and PM Modi yesterday.
The growth figures are expected to slip as the year progresses. The World Bank has predicted that India will see growth of just 1.5-2.8 per cent in its current financial year, down from an expected 4.8-5.0 per cent for the year just ended.