After nearly 50 days of one of the world’s most stringent lockdowns to combat Covid-19, during which the Indian economy went into freefall, Prime Minister Narendra Modi announced an economic package that would put the country back on its feet and make it self-reliant.
For Modi’s most ardent fans, the narrative logic that followed seemed to make sense: at the 20th minute of the 20th hour of the day, Modi announced that his government would offer up an economic package of Rs 20 lakh crore. It was, he declared, “20 lakh crore for 2020”.
However, Modi offered no details of the economic package in his speech. He left it to Finance Minister Nirmala Sitharaman to confoundingly provide information through “tranches of announcements” spread over several days.
There was no explanation given for why the announcements couldn’t be made in one day, or why Sitharaman told reporters on the first day that they would have to wait until the very last announcement to get an accounting of how the government will be funding a Rs 20 lakh crore package.
After two days of announcements from the finance minister, it seems clear that the Rs 20 lakh crore number is essentially meaningless – a bit of narrative and mathematical jugglery that amounts to little.
For one, the number includes liquidity announcements already made by the independent Reserve Bank of India so. In an effort to ensure that firms have easy access to credit, the central bank has moved in a big way over the last month to provide cheap money for banks to borrow. Its operations alone account for nearly half of the Rs 20 lakh crore package that Modi referred to.
When Modi announced the Rs 20 lakh crore package, it seemed as if he was disagreeing against those in his government who have argued against “free lunches”. Instead, he gave the hope that the government would announce big measures that offer cash transfers, income support and fiscal stimulus of the sort that even hawkish economists are now calling for. Many analysts have even drawn out ways in which the government can find the funds to pay for such crucial initiatives.
But the details suggest more of the same approach to economics that drove India into the ditch before Covid-19.
Sitharaman, who is slated to make more announcements as well as explain how the government will pay for its package, may yet announce something major on the spending side to boost demand.
So far, however, it seems evident that the government has privileged narrative – 20 lakh crore at 20:20 for 2020 – over a genuine effort to lift India out of the mess.
THE REALITY 
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