Announce the stimulus, now

It must be geared towards all businesses, not just one segment.

It has been 37 days of the national lockdown. Besides the first announcement — on March 27 — of a ₹1.7 lakh crore package to provide what were rather minimal relief measures to the poor, the Centre has not yet come up with a package for the economy. Prime Minister Narendra Modi, in one of his first speeches to the nation on the coronavirus pandemic, spoke of the creation of a high-level economic task force to suggest measures, but little has been heard of it since. There are indications that the government is working on a stimulus. Besides the fact that this is already delayed, reports suggest that this is broadly focused on the micro, small and medium enterprises (MSMEs).

There are indications that the government is working on a stimulus. Besides the fact that this is already delayed, reports suggest that this is broadly focused on the micro, small and medium enterprises. (Bloomberg)

There can be no doubt that MSMEs have been severely affected due to the lockdown. They have little financial cushion; they employ the majority of India’s workforce; and they need urgent help. But it will be a mistake if the government just focuses on them, and ignores the demands of larger industry bodies that have sought a more comprehensive package. Given India’s socialist past, there is a tendency to look at bigger businesses with suspicion. But as the decades after economic reforms have shown, these businesses are critical. They provide mass employment, both in manufacturing and services; they are at the forefront of innovation; they can embark on larger projects which are critical for infrastructure needs; and their contribution to the revenue basket is key to fiscal health.