The Indian Economy is going through its worst phase after independence. The GDP numbers of the first quarter of running fiscal indicate that the economy shrunk by 23.9% biggest crash in over 40 years. Finance Minister explicitly shift the blame to 'Act of God'. However, she ignored the fact that the Economy was constantly plummeting since 2018, 'Act of God' or the COVID-19 pandemic only accelerated the process.
Strictest lockdown in the world
PM Narendra Modi announced the world's strictest lockdown in March 2020, leaving lakhs of migrant labours on road. The ill-planned and mismanaged lockdown dealt a catastrophic blow on the informal sector that was already in tatters ever since the draconian Demonization which was announced in a similar manner around 4 years ago.
The much-hyped fiscal stimulus package that was earlier announced by Modi, giving the call for 'Atmanirbhar Bharat' turned out to be a drop in the ocean. The government claimed to have offered financial support of Rs. 20 lakh crore to the multiple beneficiaries including handing out free rations to the migrants and daily wagers. But against all this claim of biggest ever support to the poorest and MSMEs, the Indian economy plunged to its worst in 40 years.
Moreover, the combined revenues of 2,170 listed firms tanked 24.3% YOY during Q1, mirroring 23.9 per cent contraction in India's gross domestic product (GDP) for the same period. The alarming figure has prompted the government to provide another fiscal support. The media report have claimed that the government, in fact, is conducting meetings to chalk out the details of another fiscal package.
Fiscal package 2.0 on cards?
As per a report in The Indian Express, the government is in the process of identifying who needs financial support the most. Quoting one the finance ministry official English daily reported, "This round of fiscal stimulus will be more for the group which is not completely poor and not rich. This in-between, the non-salaried middle class, it is the most affected. The timing of the rollout is crucial in getting the maximum benefit."
The real issue remains yet to be addressed. Against the governments' claimed the GDP has tanked and it must ensure that the fiscal package 2.0 is charted out to resolve the issues on the group. It must ensure the revival of the supply chain, returning of labours to factories and spur demand by handing cash in the hands of the consumer.