THERE IS MORE TO IT THAN WHAT MEETS THE EYE

Here's the break-up of Rs. 20 lakh crores 'Aatm Nirbhar Bharat' stimulus package:

Earlier measures: Rs. 192,000 crores

Tranche 1: Rs. 594,550 crores

Tranche 2: Rs. 310,000 crores

Tranche 3: Rs. 1,50,000 crores

Tranche 4+5: Rs. 48,100 crores

RBI measures: Rs. 801,603 crores

Total: 2,097,053 crores

To confuse liquidity with expenditure is a cardinal mistake that we must not overlook. Giving softer loan, extended loan and deferments of instalments are fiscal measures to stave off the ensuing NPA's due to lockdown & is not a stimulus and that makes part of the twenty trillion rupees stimulus that Modi blared on TV.

In reality, hardly 10 % of it would go as direct benefit transfer and rest would be fiscal measures utilised for waiver, deferments and restructuring the existing loans.

We also have example of Germany that has declared a stimulus totalling to almost 2.3 trillion Euros or equivalent of Rs. 184 trillion Rupees. Germany has clearly outlined that out of 2.3 Trillion Euro stimulus, 236 Billion Euros are for recapitalising the businesses that are affected by COVID 19 by direct transfers & grants to restart the businesses. It is not a loan, but is a onetime grant. It has also granted 500 Billion tax deferments to businesses and 1.3 trillion Euros in other liquidity and guarantee measures that would be extended through financial systems. This huge money Merkel committed for hardly 84 million people that Germany has.

The question we need to understand now is to understand that boosting liquidity is enough or to put money in people’s hands to prop demand is?

We having 1360 million people have committed 20 trillion rupees in overall stimulus and has hardly to do with COVID 19 package & that too nearly 802 Crores were already declared by RBI as stimulus for businesses. It simply means that if we had done direct cash transfer to all people then, we could have got hardly 1470 per head. But we have not even done 10% of the package as Direct benefit Transfer to the distressed.

So I am at a loss to understand why we are making so much of a jamboree out of something that is no better that is a confused hyperbole to confuse citizens of India. So here is brief dissection to tell my friends what has been on the table.

Earlier measures: Rs. 192,000 crores (taken before the 20 Lakh crores announcements) and detailed as revenue lost due to tax concessions announced since March 22: Rs 7,800 crores, PM Garib Kalyan Package: Rs. 170,000 crores, PM's announcement for health sector: Rs 15,000 crore

Tranche 1: Rs. 594,550 crores - Emergency working capital facility for businesses including MSMEs: Rs. 3 lakh crores, subordinate debt for stressed MSMEs: Rs. 20,000 crores, Fund of fund for SMEs: Rs .50,000 crores, EPF support for businesses and workers: Rs. 2,800 crores

Reduction in EPF rates: Rs. 6,750 crores, Special liquidity scheme for NBFCs, HFCs and MGIS: Rs. 30,000 crores, Partial credit guarantee scheme 2.0 for liabilities of NBFCs and MFIs: Rs. 45,000 crores, DISCOMS: Rs. 90,000 crores reduction in TDS/TCS rates: Rs. 50,000 crores.

Tranche 2: Rs. 310,000 crores - The second tranche included free food grain to stranded migrant workers for two months and credit to farmers, totalling Rs. 3.10 lakh crores. Free food grain supply for migrant workers for 2 months: Rs. 3,500 crores interest subvention for MUDRA Shishu loans: Rs. 1,500 crores, Special credit facility for street vendors: Rs. 5,000 crores, Housing CLSS-MIG: Rs. 70,000 crores. Additional emergency WCF through NABARD: Rs. 30,000 crores, Additional credit through KCC: Rs .2 lakh crores

Tranche 3: Rs. 150,000 crores- MFEs: Rs. 10,000 crores, PM Matsya Sampada Yojana: Rs. 20,000 crores, TOP to TOTAL: Rs. 500 crores & Agro infra fund: Rs. 1 lakh crores, Animal husbandry infra development fund: Rs. 15,000 crores, Promotion of herbal cultivation: Rs. 4,000 crores, Beekeeping initiative: Rs.500 crores

Tranche 4+5: Rs. 48,100 crores - Viability gap funding: Rs. 8,100 crores, Additional MGNREGS: Rs. 40,000 crores

RBI measures: Rs. 801,603 crores announced prior to 23 March for liquidity mesures and support to banks/ NBFC / MFis etc.

Total: 2,097,053 crores - of all tranches+ RBI contributions.

So cash transfer is much less as indicated below,, rest are policy tweaking and structural adjustments due to COVID 19-

1. Free food grain supply for migrant workers for 2 months: Rs. 3,500 crores
2. PM Garib Kalyan Package: Rs. 170,000 crores, a break up is indicated below, but it has not rolled out to more than 50% of intended beneficiaries & that includes –

• Rs. 500 each to 19.86 crores women Jan Dhan account holders
• LPG cylinders to be provided to 8 crores poor families for the next three months free of cost.
• Rs. 1,000 for senior citizens to tide over difficulties during next three months.

So now get the jingles out of the noises aroud 20 lakh crores

E& O E possible as continuous typing and editing is hard.