Capital Grapevine
Capital Matters

Capital Grapevine

Virendra Kapoor

No one can quarrel with the huge economic revival package

Rupees twenty-lakh crores. Wow! It is not easy to get one’s head around that mind-numbing number. After the prime minister announced the humongous post-corona, albeit bare-boned, revival package last Tuesday, Finance Minister Nirmala Seetharaman on three consecutive days has sought to flesh it out, devoting each session to a separate sector of the economy and different target groups. Despite her valiant effort, if still some nagging questions remain unanswered, so be it. Having said her piece, she determinedly moves on, as is the habit of most Modi ministers.

But a lack of finer details should no longer warrant the charge that nothing is being done for pulling the economy out of the woods. Plenty is. But, as they say, the proof of the pudding lies in its eating. How at the ground level will the package translate into reality is crucial for it to be effective. Whether the economic environment improves for individual economic actors to avail of the huge bail-out package being rolled out remains to be seen. The real effect will not be known till well into the next financial year, though anecdotal evidence will be sought to be presented daily by the usual loudmouths of the Opposition.

It is because the country is still to emerge from the pandemic. Whether the lockdown is lifted fully or partially, the economy cannot be back on full stream anytime soon unless the tens of thousands of migrant-workers who, at a great risk to life and limb, and going without sleep and food are trekking back to villages, are back on their earlier jobs. Several industries in Delhi and Gurgaon despite relaxations are finding it hard to resume full production due to the flight of the workers. Or a lack of raw materials from allied industries.

As for the sectoral packages, from what can be gathered from the official announcements thus far, the onus is now on the potential beneficiaries to come forward and avail of the concessions. There are no cash handouts being delivered at doorstep. Nor is there a promise of a Universal Basic Income Scheme, something Rahul Gandhi has taken to parroting after the newbie Nobel laureates, the husband-and-wife couple Abhijeet Banerjee and Esther Duflo, drummed it into his ears as the panacea to solve India’s perennial poverty. By the way, if the Gandhi scion is so sold out on UBI why can’t he direct the party governments in Rajasthan and Chhattisgarh to roll it out --- and thus shame the BJP States into following suit?

Back to the package, though. Now, how migrants returning home from towns and cities can access free wheat, rice and ~channa~ from unspecified ration shops is unclear. They cannot possibly be carrying their ration cards with them. It would have been better to empower village panchayats to provide a minimal quantity of cereals free of cost till the pandemic was over. Lack of food is the number one problem for millions returning home after so abruptly losing their meager incomes.

The package has much for the vast micro, small and medium enterprises which employ over twelve crore skilled and unskilled workers. This sector is perennially starved of funds, finding it hard to access bank credit. The package offers it a whopping Rs. three lakh crores. Not as an outright hand-out to millions of entrepreneurs? No. But the government will be a guarantor should they come forward to avail of the easy credit. Given how such enterprises find it hard to borrow from banks, especially after the fear of CBI, CVC and ED virtually immobilized lending despite banks sitting on a mountain of cash- liquidity , the promise of a Rs. 3-lakh crore collateral-free credit is not to be sniffed at.

Also, no less significant is the additional Rs.30,000 crores for the non-banking financial companies. After the gross mismanagement by the top brass at the ILFS, which led to its collapse in mid-2018, the entire NBFC sector has been in the doldrums, with a very nasty fallout for the real estate sector. Likewise, housing finance companies, mutual funds, power discoms, etc. are promised easy access to funds. Clearly, the single mantra which has fired the revival package seems to be liquidity and still more liquidity.

However the problem in a good percentage of cases is not the lack of liquidity but it is either the lack of conducive conditions for growth or a sheer absence of demand. The charge that the package does nothing to spur demand is not without a basis, especially when even the concessions in TDS, EPF, etc., leave a little more in the hands of account-holders but it is their own money and does not in any way constitute a gift from the government. If one has the option to save compulsorily a little less because of the pandemic that it is no favour. It will hurt later. In that sense, the middle and the salaried classes have got precious little from the package.

Finally, despite all its flaws and shortcomings, the real test lies in how well the package translates into action at the ground level. Delivery is as important, if not more, as various provisions in the package. Pessimism about the package reaching the beneficiaries is justified given the experience about the endemic corruption, sloth and inherent red tape built into the system. The other day, unable to cope with the task of handling the challenge of restless and rampaging migrant workers, the Delhi Chief Minister Arvind Kejriwal blamed it on the failure of the `system.’ Modi’s challenge is to ensure that that `system’ is well attuned to the needs of the pandemic-hit India.

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The same old controversial Judge

Retired Bombay High Court Judge Abhay Thipsay, who last week caused embarrassment to the Congress Party by claiming in a legal opinion that no case of fraud was made out against the fugitive crook Nirav Modi, said in a TV interview that he was `an ordinary member of the Congress Party.’ Ordinary members are not ordinarily granted formal entry into a party with the former chief minister and Pradesh Congress president being on hand to personally welcome them. Thipsay, to tell the truth, has been controversial all along. As a judge he caused consternation granting bail immediately to Salman Khan after he had mowed down people sleeping on the pavement. Also, he put Amit Shah into jail in the Sohrabuddin case. And again granted bail on the phone to alleged terrorists, and so on. With so much controversy about him as a judge, there should be little surprise if post-retirement this `ordinary’ Congress member lives up to his reputation. Retired judges do give opinions for hefty fees. But giving a clean chit to Nirav Modi, who fled the country after defrauding the Punjab National Bank of over Rs. 7,000 crores, makes Thipsay an extraordinary ex-judge. We have no clue how much the learned judge Thipsay was paid certifying that no case was made out against Nirav Modi.

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Uddhav five-times richer than Pawar

Last but not the least. What surprised most about Maharashtra Chief Minister Uddhav Thackeary’s affidavit he filed for election to the State Legislative Council is not that he has assets of over Rs. 143 crores. No. What is really surprising is that his assets are nearly five times more than those Sharad Pawar had declared at the time of his election to the Rajya Sabha this March. Pawar declared Rs. 32 crores in total assets.

Most observers find it unacceptable that Thackeray should be richer than Pawar, though both came from modest backgrounds to begin with. Bal Thackeray was a low-paid newspaper cartoonist when he was encouraged to establish the anti-outsider pressure group, the Shiv Sena, by the then Congress leaders Rajani Patel and V P Naiq. Pawar and Thackeray became politicians around the same time in the late 60s. But it was Pawar who was widely thought to be the richest politician in the country. Neither Pawar nor Thackeray inherited wealth. Your guess as to how they accumulated their wealth is as good as anyone else’s.