PM Narendra Modi Announces Rs. 20 Lakh Crore Packages

:PM Narendra Modi Announces Rs. 20 Lakh Crore Packages:

Introduction:

• Prime Minister Narendra Modi has announced that a “new lockdown” will continue beyond the end of the current phase on 17 May,but that the government will provide a massive special economic package to revive the economy that has been battered by the Covid-19 pandemic.This special announcement comes on 12th May,2020 evening.The total cost of the package will be Rs 20 lakh crore i.e. almost 10 % of total Indian GDP.The PM said it would be named ‘Atmanirbhar Bharat Abhiyan’.

Media/Channel agencies:

• That is why the some local & foreign media has been published the matter in their newspaper.Some sample copy mentioned in below-

The Economics Times

The Newyork Times

The Print

Facts:

• It is aggressive stimulus package in Indian economy compared to rest of the world for revive in this particular pandemic condition.Also our PM talks about land,labour,liquidity & law.   

 What is GDP: 

• The full form of GDP IS "Gross domestic product". In simple way the Gross Domestic Product measures the value of economic activity within a country. Strictly defined, GDP is the sum of the market values, or prices, of all final goods and services produced in an economy during a period of time. Suppose in 2019 we have produce many things in our factory,sample like toothpaste to soap etc.The total value of those things is called GDP.

• If GDP is rising, the economy is in good shape, and the nation is moving forward. If GDP is falling, the economy is in trouble.

 GDP ranking in India :

• Generally in world we have considered GDP report based on three organization/agencies as mention below-

1. International Monetary Fund (IMF)
2. World Bank
3. United Nation

• However based on acceptability of modern world we have generally go on based on report provided IMF organization. Data from the IMF shows India has risen to become the world’s fifth largest economy.                                   

                        

Picture shows that in last year India have 2,93 trillion US dollar,overtook renowned country like UK,France,Italy.If we are convert this trillion US Dollar into Indian rupee,it will come around 200 lakh crore. Now all of you understood that why it is called 10% of GDP. Because of that we call it bold step taken by Indian government. 

Also one article was published in "World economy forum", on Dated 19th February,2020 that India got 5th place in GDP ranking in world economy.

  

World Economy Forum

     Analysis of 20 lakh crore package distribution :

• The Rs. 20 lakh crore package includes mention in below-

1.  Rs 1.7 lakh crores for free food grains to poor,cash to women & elderly relief announced in March,2020 under PM Garib Kalyan Yojana.
2. Reserve bank liquidity measures & interest rate cuts around Rs.6.5 lakh crore. Recently RBI has given a liquidity on March,2020. Liquidity means provide more loan in cheaper rate to our industry,corporate sector. So that they can expense more and demand can increase. As you know RBI given also Rs.50000 to mutual fund. So in totality RBI given Rs. 6.5 lakh crore to boost economy. Hence the total amount will be around Rs. 8 lakh crore considering amount of Rs. 1.7 crore. So Government already announce 4% of Total GDP. Remaining 6% of GDP announce recently,i.e. almost Rs. 12 lakh crore.

        From where money will be originate :

• As you know it is a huge amount and everyone have quarries that from where money will comes from. As you know friends that Indian government already loss Rs.4 lakh crore revenue due to 2 months lockdown. It is not possible to say how long lockdown will last,can't predict.
• Government did announcement rupees 2.1 lakh crore earning through disinvestment,example like LIC IPO etc. Hence it won't come through this.

• So government decided to borrow Rupees 12 lakh crore in the financial year 2020-2021. Government may follow two steps either through "Bond" or "Monetization of Deficit". Monetized deficit is when government prints money in order to pay its deficits.But the government has not yet said anything,so we won't consider it now. Most probably borrow from bank or RBI.The government will do it in the coming days.      
• Indian finance Minister Smt. Nirmala Sitharaman already held a press conference in-front of media on 13 th May,2020 related to detail discussion of the same.  

    Where money will be Utilized :

• Moreover government focus on mainly four things,such as  land,labour,liquidity & laws. 
• Land is very much important now a days. As you know many outside companies are going to invest in India.Proper land acquire with associate facilities is very much important.
• Give additional facility,benefits to labour.
• As you know the fact of liquidity benefits provided by RBI for increasing in demand.
• Much more deduction in laws for boosting
• More over it will cater to various section in MSME (Ministry of Micro, Small  and Medium Enterprises) sector ,labour,middle class,cottage industries. As all of know "Atmanirbhar Bharat Abhiyan" in English "Self-reliant India campaign" already been started as per clearly indication given by honorable PM.

   Debt to GDP ration amongst all popular country :  

• International Monetary Fund released data long time back the Debt to GDP ratio to make international comparisons of the public debt burden.

     

Debt to GDP ratio

• Now if the government will borrowing,the debt to GDP ratio will increase.Obviously it will happen in future. Accordingly GDP growth rating will be deteriorate. 

• Also note that Moody's also forecast GDP growth rate will be zero in financial year 2021.   

             

Business line,*th May,2020

• Also Moody's forecast GDP growth will be bounce back to 6.6 percentage in the financial year of 2021-2022.  

      "Hopefully I have been able to explain to you as much as possible"

                                     Thanks

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