FM must present package fast

<p style="font-weight: 400;">All eyes are now on Finance Minister Nirmala Sitharaman. Prime Minister Narendra Modi on Thursday, in a televised address to the nation, announced setting up of an economic response task force under Sitharaman to thrash out fiscal measures arising out of current economic challenges.</p>
<p style="font-weight: 400;">What is required is quick action and a well thought-out strategy. An economic package, many say, similar to the one provided in 2008-09 to combat global financial crisis, could be on the way. But the announcement must be made at the earliest so that industry, markets, and labor force get reassurance amid rising uncertainty and panic. Analysts, in fact, said that Sitharaman should have been ready with a concrete package by now.</p>
<p style="font-weight: 400;">Indian stocks on Friday made a strong recovery to close at 6 per cent higher, thanks to the announcement made by Modi.</p>
<p style="font-weight: 400;">A State Bank of India report underlined the need to direct the increased excise revenue to carve out a fiscal package, instead of using it to bridge fiscal gap and pleasing the markets. The silver lining is the fall in global crude prices, which even dropped below the $30 dollar-a-barrel level. This will help India in keeping its import bill in control.</p>
<p style="font-weight: 400;">“…sound economics demands it [the windfall from cheaper crude] must be used as a fiscal package for income support to the people working in the unorganized sector who are already facing the brunt of loss of jobs,” the SBI has suggested.</p>
<p style="font-weight: 400;">Large-scale migration of daily wage earners from urban areas to back to their villages has begun with the country, which is gradually getting into a lockdown mode in a bid to arrest the spread of the deadly COVID-19. Joblessness in the rural areas is likely to increase exponentially with thousands of people engaged as daily wage earners return to their villages.</p>
<p style="font-weight: 400;">Sitharaman must frame effective policies, including tax breaks along with booster doses to micro, small and medium enterprises or MSMEs. This could protect incomes, especially of those who belong to the economically weaker strata. With borders getting closed to avoid the spread of the disease, imports of crucial items are also likely to be impacted. This will lead to a shortage of supply of goods.</p>
<p style="font-weight: 400;">It is also important to ensure that there is enough cash supply in the system, which is needed to cushion any kind of liquidity demand. Several other countries such as the US, Australia, and Italy have already announced fiscal packages to arrest the economic slowdown. Australia has announced $11.4 billion, while Italy, which has seen the highest number of deaths from the coronavirus, has committed $28 billion.</p>
<p style="font-weight: 400;">As on Saturday, the number of active coronavirus cases in India stood at 231. The fear is that the number may go up, and this would worsen the impact on the economy. Therefore, the need of the hour is a reasonable package from the Finance Minister. The sooner, the better.</p>.