20 Lakh Crore Push

There was recently news that Indian govt to borrow 12+ Lakh Crores this year. Intellectuals with half knowledge went berserk without knowing that the govt anyway borrows around 8 Lakh Crores yearly and this was additional 4 Lakh Crores or a 50% additional borrowing.

The government may garner another 1 Lakh Crore by way of fuel taxes which were hiked recently. The lower crude prices are a boon to India and those intellects who keep cribbing that the benefit should be passed to the consumers don’t understand that such moves will negate all benefits which lower prices bring on the table. You should also read this old article of mine on fuel prices: https://vridhi.co.in/2016/01/06/few-words-on-market-33/

Even after read, that old article is a person doesn’t get convinced then so be it. I would always support not passing huge benefits on crude, which ever government is at the centre, I would be with govt on this. Only condition: There should not be scams, and the money looted. That’s a fair condition, I believe.

The #EconomicPackage announced by #PMModi #NarendraModi should relieve many economists. The country was eagerly awaiting an economic package.

#CoronaVirus has put on back foot the global economy. No country has been spared. Most countries are announcing packages, and the central governments are also announcing stimulus packages so that the economy does not collapse and the businesses, people can be helped.

Today’s package at least sounds excellent. Cannot talk on details since the same will be made public tomorrow probably by the finance minister herself. Still, it looks great since it accounts for almost 10% of the GDP.

Few things we need to be clear on:

Don’t expect that monies will hit your bank account directly. Like the 15 Lakh lie, many people will try spreading such news.

My suggestion to the govt will be to support businesses and farmers only.

Stock Market will take this as a piece of great news, SGX Nifty is trading 5% higher as I write this article.

Pessimists will talk about #FiscalDeficit going up. Thankfully, the govt has been maintaining 3% to 3.5% fiscal deficit ratio, and this gives them the room to help people in this hour of need.

The package should help businesses so that they don’t go shutter down.

The package should help reallocate money in various sectors so that jobs can be created.

Fiscal Deficit will not be a problem if the package can bring back growth on track; hence all support should go where it’s needed.

I am bullish on India, I feel India will recover first in the world when this pandemic goes into history. More in the next post.

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Vivek Karwa

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