The Indian economy needed a rescue package and it is getting one. As much as the package itself, we needed a big headline number. Because sentiment matters too. We got that : Rs 20 lakh crore.
Yesterday was the first tranche of the scheduled announcements from the Finance Minister, starting with a package for the reeling MSME sector. Not surprisingly, there are many technicalities here. And intimidating language like “subordinate debt,” which I cannot unpack.
Let me first mention at least the parts that I understood. The first is Rs 3 lakh crore of soft credit which I believe is for four years. The next is Rs 75000 crore for the NBFC sector, which has been living the worst kind of nightmare since late 2018 when IL&FS collapsed. Considering the condition of the NBFC sector, I think a special task force should be organized to look into their situation.
Then there are the tweaks that put more money into the hands of business. While making payments, they now have to deduct TDS of 7.5% and not 10%. The EPF contribution is reduced to 10% from 12%.
Then, there are the policy decisions, such as govt contracts below 200 crores will now go only to local firms. And the turnover limits on the definition of MSMEs have been raised, sometimes four times as high. So that firms can afford to grow big without having to worry about losing incentives for small business. I noticed others in the FM’s speech, such as the definition for MSME in services sector will now be the same as in the manufacturing sector. Just think about it: what big purpose was being served all these years by having different definition of “micro” in manufacturing vs services? This is exactly the kind of pesky regulation that hurts ease of business and makes babus richer than entrepreneurs. Good to see this go.
Obviously, I am not an expert. It is hard for me to comment on the details. As such, it is much more efficient for me to look at the ‘usual suspects’ : see what they are criticizing and take it from there.
Which is why I think govt has done a very good job here. Did you see the usual suspects? All silent.
Now, there is a simple objection here that must be addressed. Okay Abhishek, you say you cannot comment in detail because you’re not an expert. But neither are those usual suspects. Perhaps they are silent for the same reason.
To that, I say … LOL! When has not being an expert ever stopped those people? They were speaking like MIT engineers on power grids. And like Nobel winning chemists on Hydroxychloroquine. All this within the last month or so. If necessary, they will scour the skies and the depths of the ocean to find ‘experts’ to criticize the MSME package. If they cannot find such experts, govt must have done a really good job.
I noticed that the vacuum of criticism was filled by pure trolling. Memes and jibes. Cheap shots at PM’s watch or sunglasses or something. Sponsored trends on social media. Zero traction. Zero organic participation from real people.
Trolling will always be there. But it is after a long time that I didn’t see a single liberal even try to make a point. Perhaps there was a weak excuse for this on Tuesday night, because PM himself had not given much detail beyond “20 lakh crores.” But first batch of details came out yesterday. If critics had something to say, they would have.
I was able to find some voices. Such as Prashant Kishor saying something like : Why does PM say we can turn the crisis into opportunity? Is the world stupid that they cannot understand how to turn crisis into opportunity?
This is absurd, mindless criticism that requires no response. It says more about PK’s frustration and IQ level than anything else.
Meanwhile, Mamata Banerjee said the package was a “big zero.” And nothing else. Chief Minister sounding like a Class 5 kid who screams “no ball” after getting their stumps knocked over. And then will not hand over the bat no matter what… Sad.
The Congress response was no better. They said shame for not having anything for workers. Well, yeah. Because yesterday’s announcement was the first tranche of a package, meant only for MSMEs. This is like complaining that your local dairy has run out of apples.
All in all, a strong beginning to the economic rescue package. A lot of hard work seems to have gone into it. Let’s wait for the next tranche.