Devil is in fine print

As the saying goes, the devil is in the details. Even though PM Narendra Modi has announced a much-needed economic package worth Rs 20 lakh crore, the nation got a sneak preview when the RBI announced relief of Rs 5.5 lakh crore; also, last month Finance Minister Nirmala Sitharaman had unveiled a Rs 1.7 lakh crore package. This means what remains of the promised package is Rs 12.80 lakh crore.

The key issue is how will the government finance this package, as tax mobilisation has been impacted heavily while demand has shrunk. Several experts believe it is not a stimulus package but merely a stratagem to overcome expenditure. The fiscal deficit is expected to cross 5.5%; besides, there will be additional borrowings of Rs 4.5 lakh crore.

Experts have said that in MSME sector alone there has been a loss of Rs 12 lakh crore since lockdown. MSMEs contribute about 7-8 per cent of India's GDP, 45 per cent of the manufacturing output and 40 per cent of the exports.

A KMPG report predicted last month that tourism and hospitality sector is slated to lose more than over 3.8 crore jobs. Likewise, aviation sector may lose as much as Rs 5 lakh crore along with 4 crore to 5 crore jobs. Again, the automobile sector has grind to a halt. The industry, therefore, expects the package to cater to the ones at the bottom of the manufacturing chain.

As far as real sector is concerned, ANAROCK Group, in a report last month, said housing sales will fall 25-35 per cent, while office absorption will fall in the range of 13-30 per cent on a year-on-year basis.