COVID-19 economic package from the Modi Government
Amidst the 21 day lockdown, which the Indian economy is going through due to COVID-19, you may soon hear about the COVID-19 economic package from the Modi government. The same is under discussion between the Reserve Bank of India, Ministry of Finance & the Prime Minister’s office.
Indian government will use this money to help more than 100 million poor individuals badly affected due to this lockdown.
With the number of Coronavirus cases rising sharply beyond 500, India went into a nationwide lockdown to contain the virus spread and break its natural chain of mutation. This has directly impacted the daily wage laborers, small businessmen, roadside vendors, contract workers & millions of farmers.
Magnitude of the economic package?
Although you would get to know the exact numbers from the government announcement, however, as per current estimates the magnitude can be as large as INR 2.3 Lac Crore.
As per the estimates in 2012, India had a workforce of around 500 million individuals. Over 94% of this workforce is employed in unorganized sector. More than half of these individuals are employed in agriculture, dairy, horticulture & related operations. Due to the lockdown, the unorganized workforce sustaining at lower wages have been impacted badly.
How would economic stimulus help?
In times of slowing growth or recession forecasts, you would see countries around the world resorting to fiscal measures to stimulate the economy. The government accomplished this either lowering interest rates, increasing government spending or quantitative easing etc.
By providing money directly in the hands of people, government aims to boost the economy and help the masses to survive the crisis.
The government can do this via various option like –
- Advance Payment of Pensions
- Direct Money Transfer to Jan Dhan Accounts
- Advance payment of PM Kisan accounts
- Direct payments to daily wage laborers
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To continue reading about economy, you may check our post on infrastructure announcements made by government minister Piyush Goyal recently – “Rs 100 Lac Crore Infrastructure Investment in India“.
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