New Delhi, May 13 (PTI) Prime Minister Narendra Modi’s pledge of a total spending of Rs 20 lakh crore to weather the fallout of coronavirus pandemic is among the largest economic stimulus package announced by nations around the world.
Modi’s Atma-nirbhar Bharat Abhiyan or Self-reliant India Mission is about 10 per cent of India’s GDP in 2019-20 and would rank behind Japan, the US, Sweden, Australia and Germany.
But unlike the most relief packages announced globally, Rs 20 lakh crore is not entirely in new spending and includes Rs 1.7 lakh crore package the government had announced in March as well as the steps taken by the Reserve Bank of India (RBI) such as liquidity enhancing measures and interest rate cuts.
With global lockdowns imposed to check spread of COVID-19 causing economic turmoil that is touted to be worst since the 1930s, nations around the world have announced what came to be known as ‘coronavirus stimulus packages’.
The US has committed to the largest rescue package by any country in pure dollar terms of USD 2.7 trillion but as percentage of GDP it trails behind Japan, according to data compiled by economist Ceyhun Elgin in the COVID-19 Economic Stimulus Index (CESI).
Japan has announced a package equivalent to 21.1 per cent of its GDP. It has outlined USD 1.1 trillion recovery package and plans for further spending.
The US measures work out at an estimated 13 per cent of GDP.
It is followed by Sweden with a stimulus equal to 12 per cent of its GDP and Australia (10.8 per cent). Germany has announced a spending of around USD 815 billion, equal to 10.7 per cent of its GDP.
Italy, which endured devastating coronavirus outbreak, has announced an Euro 750 billion (around USD 815 billion) package.
India’s Rs 20 lakh crore package equals to USD 265 billion, all of which is not government spending as in case of the US where entire USD 2.7 trillion is the money that the Trump administration will spend and does not include what the Federal Reserve (US central bank) might have done.
In March, India committed Rs 1.7 lakh crore (USD 22.6 billion) in COVID-19 related relief measures that included free foodgrains to poor and some cash to poor senior citizens and women. This was followed by Rs 3.7 lakh crore of liquidity support by the RBI in March and another Rs 2 lakh crore in April.
The RBI had last month said its measures provided support equivalent to 3.5 per cent of the GDP.
The Rs 20 lakh crore package Modi talked on Tuesday evening includes these measures.
The United Kingdom with a 100 billion pound package of immediate fiscal spending (and 330 billion pound of deferred payments like tax breaks and loan guarantees).
In Europe, Spain and Italy have endured devastating coronavirus outbreaks, the size of stimulus packages are estimated to be 7.3 per cent and 5.7 per cent of GDP, respectively. France announced a package equal to 9.3 per cent of its GDP.
Smaller countries like Luxembourg and Belgium have spent a fifth of their GDP on COVID-19 related stimulus measures, at 20.7 per cent and 19.2 per cent, respectively.
Modi did not give details of the package saying Finance Minister Nirmala Sitharaman will over the next few days give details.
India’s stimulus value in dollar terms is higher than the GDP of 149 countries such as Vietnam, Portugal, Greece, New Zealand and Romania. It almost equals Pakistan’s annual GDP of USD 284 billion.
Also, the stimulus is 1.8 times bigger than USD 147 billion in fortune of the 10 top wealthiest Indians. The amount is five times the personal wealth of richest Indian Mukesh Ambani.