Phew! The last day of “Project Evade”. The govt made 3 things clear: one, it doesn’t intend to spend for farmers and workers; two, instead of borrowing/monetising, it prefers to disinvest & raise money; and three, it sees the crisis as an opportunity to deepen reforms. 1/n […]
World over, out of about $7.5 trillion announced by different govts, about $3 trillion (40%) are “spending and revenue measures” and about $4.5 trillion (60%) are “loans, equity injections and guarantees”. India is a major exception to this global trend. 2/n [...]
If we take a very liberal view, not more than Rs 1.2 lakh crore out of Rs 20 lakh crore in India is direct spending. All the rest are measures to increase liquidity or bank credit. Even if we include some other indirect steps, the total won’t exceed Rs 1.5 lakh crore. 3/n [...]
The PMGKP in March for Rs 1.7 lakh crore was total fluff. It included even committed payments like the first installment of PM-Kisan and monetising of the food stocks of the FCI. Direct spending measures will not exceed Rs 50,000 crore in PMGKP even if we include PM-Kisan. 4/n
In the steps that followed, MGNREGS has Rs 40,000 crore; EPF support is Rs 2800 crore; free food grain to migrants is Rs 3500 crore; MUDRA subvention is Rs 1500 crore; viability gap finding is Rs 8000 crore. Including PMGKP, the total spend is thus less than Rs 120,000 crore. 5/n
Rest is all through banks using their deposit base, or nudging institutions like NABARD to raise through market borrowings. This includes the credit schemes announced for MSMEs. So, this is the sum-total for India: less than 10% of the package comes on the fiscal side. 6/n
The Rs 40,000 crore for MGNREGS was the only relief measure today. It is welcome even if a small rise. The rise in health spending is just an intent. No money has been set aide for it. Starting TV channels does’nt cost money. Decriminalising Companies Act is also costless. 7/n
The real message from today was that the govt would prefer raising resources through a massive disinvestment programme rather than borrow or monetise the deficit. While the world is bringing the state back in, India is pulling back even the little state that existed. 8/n
There will be a large transfer of public resources to the corporate sector. The idea of strategic sector will be diluted. Banks & oil companies will be privatised. LIC’s privatisation will be fast-tracked. Disinvestment will erode our self-reliance and “atma-nirbharta”! 9/n
To raise the limits for borrowing of State govts to 5% from 3% of GSDP was welcome. But it was disappointing when a number of measures unrelated to Covid were added as conditionalities to access the higher levels of debt. Covid has nothing to do with power reforms! 10/n […]
This eagerness of the govt to see the entrenching of neoliberal policy as an overriding objective in the midst of the pandemic is extremely condemnable. It would have been far better if the money provided to State govts was untied. 11/n
Finally, FM’s outburst on migrant workers was just appalling. Her refusal to accept that migrant workers paid for train tickets was insensitive. They paid Rs 700-900 per ticket. Nowhere did the centre inform the States that ticket costs will be shared. That's the fact. 12/n
The justification from govt was deceitful. Historically, the centre subsidises train tickets by about 57%. The centre claims to have added another 28% and made it 85%. The rest was to be borne by States. Then why did workers pay for tickets? Its a simple question. 13/n
Instead of giving a simple answer, and by trying to deny that workers had to pay for tickets, and then insisting that the centre paid 85%, the FM was turning herself into a laughing stock. Hope she and the govt realises it. 14/n
In sum, “Project Evade” ensured that the govt successfully evaded its responsibility towards its citizens during Covid. The media, except a few, refused to pin the govt down. All glib talk & good press ensured the govt’s image didn’t suffer. But people are surely watching. 15/15
