India to inject $40bn into small industries
India on Wednesday said it would invest $40 billion into small-scale industries, which employ more than 60 million people nationwide, as part of efforts to revive its economy amid the coronavirus pandemic.
Collateral-free, automatic loans would be given out to micro, small and medium-sized enterprises (MSMEs) within a fouryear timeframe, Finance Minister Nirmala Sitharaman told a press conference in New Delhi. She added that 4.5 million MSMEs would benefit from the scheme. The initiative comes a day after Prime Minister Narendra Modi announced a $260 billion stimulus package, saying in a televised address that India should view the COVID-19 crisis as an “opportunity to achieve economic self-reliance.” Sitharaman said the call for selfreliance did not mean isolating India.
“The plan is to make India confident in its abilities, not isolate India from the world,” she explained. “We have the ability to contribute to the world, as we have seen recently.”
India’s lockdown started on March 24 and ends on May 17. The sudden stoppage of economic activity hit daily wage workers particularly hard, leaving them without income, food, and stranded in different parts of the country.
Opposition parties were skeptical about the financial package and questioned how the ruling party planned to deal with poor and marginalized members of society, especially those worst-affected by the lockdown.
“And the first thing we will look for is what the poor, hungry and devastated migrant workers can expect after they have walked hundreds of kilometers to their home states,” said P. Chidambaram, leader of the Congress party and former finance minister.
Some economists questioned the government’s priorities, especially when India was experiencing a health emergency.
“I feel that the government is confused and not being upfront about what is going on,” Prof. Arun Kumar of Jawaharlal University told Arab News. “The government is not telling you the source of money and how it is going to generate money.
“The government is not answering the basic question. The priority for the government should be survival, especially when 50 percent of people have lost their jobs and the government needs $240 billion for one year only.” He said that India suffered from poor medical infrastructure, and that COVID-19 cases were increasing at a rapid rate. “Therefore, the first focus of the government should be to spend a substantial amount of money on improving facilities in hospitals.” Prof. N.R. Bhanumurthy, from the National Institute of Public Finance and Policy, said that the government should focus on specific sectors.
“In the current situation, every sector needs attention, but our financial situation is not comfortable,” he told Arab News. “I think the government would be (better off) choosing five or six sectors to revive the economy . . . There is a big question of livelihoods and life. This may be the hard trade-off, but this is the way one has to go.”
FASTFACT
India’s lockdown started on March 24 and ends on May 17.