Top UN economic experts have hailed as 'impressive' the Rs 20 lakh crore stimulus package, the largest so far among developing countries, announced by India to revive the economy, which has been severely hit by the coronavirus-triggered lockdown.
The Prime Minister,Mr. Narendra Modi, on Tuesday announced massive new financial incentives on top of the previously announced packages for a combined stimulus of Rs 20 lakh crore.
While launching the World Economic Situation and Prospect (WESP) report update on Wednesday, Chief of the Global Economic Monitoring Branch, Dr. Hamid Rashid, told reporters in response to a question that the stimulus package announced by the Indian government is the ‘largest so far in the developing countries because most developing countries have been rolling out stimulus packages that are between 0.5 per cent and 1 percent of the GDP.
”India’s stimulus packages are very large. And also India has the domestic financial market and the large capacity to implement that large stimulus package,' he said adding that impact of the package would depend on the design of the stimulus.
The mega Rs 20 lakh crore stimulus package includes previously announced measures to save the lockdown-battered economy, and focuses on tax breaks for small businesses as well as incentives for domestic manufacturing.
The combined package works out to roughly 10 percent of the GDP, making it among the most substantial in the world after the financial packages announced by the US, which is 13 percent of its GDP, and by Japan, which is over 21 percent of its GDP.
The Associate Economic Affairs Officer, Economic Analysis and Policy Division, Department of Economic and Social Affairs (EAPD/UN DESA), Dr. Julian Slotman, said the size of India’s stimulus package is 'impressive' and seems to be of a magnitude that will help to reassure markets and to boost domestic consumption. But at the same time when people are simply not able to spend, you cannot expect the economic growth to suddenly magically re-appear.
Lauding the Indian government for implementing a strict lockdown while the number of COVID19 cases was relatively low, he said at some point it will be inevitable to gradually ease the restrictions but warned that that could result in infections increasing.
”Fortunately in India, the Centre acted very decisively in implementing the national lockdown ' when the number of virus cases was relatively low and it seems to have slowed the spread of the disease somewhat.'.
'The decisive containment measures are absolutely critically necessary and a strong lockdown is critical in India,' he said, adding that the duration of the lockdown has to also be economically feasible. 'It is putting tremendous pressure on the Indian economy and of course disproportionately hurting the people that are the most vulnerable and poor.'