Moving resolutely toward the post-pandemic future
- The COVID-19 pandemic has plunged the global economy into its deepest economic contraction since the Great Depression of the 1930s. The editorial talks about the measures taken by India to tackle the pandemic situation and its after-effects.
Steps taken by India:
Pradhan Mantri Garib Kalyan Yojana (PMGKY):
- Following the lockdown, a massive relief package was announced for the needy.
- Around 80 crore citizens are being provided rations through the Public Distribution System.
- Over 20 crore Jan Dhan women account holders, 2.3 crore construction workers, 2.8 crore beneficiaries in the National Social Assistance Programme have benefitted from the package.
Improvement in the rural economy:
- The excellent Rabi harvest has resulted in over ?75,000 crores in farmer payments by the government.
- Almost 10 crore farmers have received ?40,000 crores as income support through the PM Kisan Samman Nidhi.
- Over 4 crore households are benefiting from the expanded Mahatma Gandhi Employment Guarantee Act scheme.
- The rural economy has benefitted from the relief programmes of the Central Government as well as the State governments.
- These massive cash payments have driven rural confidence, with consumer goods, motorcycle, and tractor purchases at or above pre-pandemic levels.
RBI and policy actions:
- Micro, Small and Medium Enterprises (MSMEs) and large corporates have been provided substantial relief through coordinated action between the Reserve Bank of India (RBI) and the government.
- Extensions were provided for compliance filings and tax payments. Borrowers received a loan moratorium of six months.
- RBI has cut rates by 115bps and pumped in more than ?9 lakh crore in liquidity into the financial system.
- ?3 lakh crores have been made available as guaranteed collateral-free loans for MSME borrowers.
- The National Bank for Agriculture and Rural Development (NABARD), Small Industries Development Bank of India, National Housing Bank, and Non-banking financial companies have all been provided refinancing facilities.
- The RBI has undertaken vast long-term repo operations to bring down the yield curve.
- RBI has also announced a one-time restructuring scheme to provide relief to stressed sectors. Borrowers will be able to restructure their loans to match their cash flows, thereby protecting their businesses and jobs.
- The net result of these relief actions has been to prevent widespread business failures and job losses, which would have resulted in permanent damage to the Indian economy.
Other Key reforms:
- The Atmanirbhar Bharat revival package was announced by the government.
- The reforms introduced in agriculture, defence production, electronics manufacturing, coal mining, and the public sector, position India for the future and generate confidence among business people and investors.
- The agriculture sector has seen the most transformational changes.
- Through a series of ordinances, price controls have largely been removed in agriculture and contract farming has been allowed.
- Kisan credit cards are being provided to all fishermen, dairy farmers, and other agriculturists.
- ?1 lakh crore has been earmarked to build post-harvest facilities.
- ?15,000 crore has been sanctioned for animal husbandry.
- Defence production is being indigenised with 101 items meant only for domestic production.
- Also, defence foreign direct investment of 74% is now allowed through the automatic route.
- Coal mining has been opened up for the private sector.
- The government has declared that there will be full disinvestment in all public sector enterprises in non-strategic sectors.