PM’s Stimulus Package Promises to Revive Economy

By Angel Broking | Published on 15th May 2020 | 4066

PM’s Stimulus Package Promises to Revive Economy

The Prime Minister on 12th May announced 20 lakh crore economic revival package as post lockdown plan to set industrial wheels churning again. The market welcomed the news with great enthusiasm and termed it as right approach to convert this present crisis into opportunity. 

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Received positive reaction from the investors and experts. The market was exuberant and started the day on a positive note. Nifty futures traded in the Singapore Exchange surged 5.5 percent after the announcement indicates strong market upward movements for Indian stock exchange as well on Wednesday.  Equity benchmark BSE jumped by 637 points as a reaction to the news. The biases are likely to remain strong as more details will come up from government contouring the outlines regarding which sectors stand to gain more.

What is the message from the government?

The package will supply the lifeblood to the sectors which are worst hit by COVID-19 pandemics like aviation, hospitality, travel and tourism, and many more. This stimulus package aims at reducing India’s dependency on foreign assistance and making it self reliant in the path of recovery, aptly named as ‘Atmanirbhar Bharat Abhiyan’. 

“This era of self-reliance will be our new pledge; we have to move on with a new resolve.” Emphasises Prime Minister on his speech. 

Although the details are yet to be declared, PM on his speech indicated that focus would be on improving Land, labour, liquidity and laws. Support will be extended to cottage industries, home industries, small and medium enterprises (SMEs) to strengthen internal economy, make it autonomous, and ensure job security in these sectors.

It is a significant deviation from the packages declared previously. Those amounted merely 1 percent of GDP, much lower than what other countries have announced. But this package amounts to 10 percent of GDP, although it includes 1.7 lack crore package announced by Finance Ministry and Rs 5.2 lakh crore liquidity package by RBI. 

Why is this stimulus package necessary?

The economy was reeling under nationwide lockdown following the outbreak of Novel CoronaVirus pandemic in the country. RBI had already announced relief packages in March easing loan EMI burdens on people. The Finance Minister relief package aimed at providing relief to the marginalised sections ensuring food safety and other necessities. But these packages did little to improve market sentiment. After this stimulus package is announced, investor confidence will return. 

 “India is preparing a complete roadmap to attract global investment of large magnitude. This crisis will completely transform India. The message for self-reliance seems to imply a lot of production and manufacturing will shift to India,” commented Deven Choksey, Group Managing Director, KR Choksey Investment Managers

In conclusion, it has exceeded expectations of most experts and has given hope to investors. The equity market is expected to remain positive in near-term post PM’s announcement on stock market as more details will pour in.