Financial package for India Inc.: Big industry may have to fend for itself

Not much of big industry's wishlist may find place in Prime Minister Narendra Modi government's Rs 20 lakh crore economic stimulus. True, details of the package will be revealed in phases by Finance Minister Nirmala Sitharaman beginning May 13, but the PM's speech gives a clear indication of who all will be the immediate beneficiaries of the package. It includes farmers, cottage industry, Micro Small and Medium Enterprises, labourers and migrants, and for the right reasons, while others will benefit from indirect measures meant to jump-start the economy as a whole.

"The thrust on labour, MSME and farmers is welcome. It will be a great help to labour reeling in misery, especially in the informal sector", says Saji Narayanan, national president, Bharatiya Mazdoor Sangh (BMS). Union Minister for MSMEs Nitin Gadkari was also among the first to congratulate the PM for the sector specific package that is about to be unveiled.

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The Prime Minister's mention of industries, employees from organised and unorganised sectors and the middle class offers some hope, but these measures are likely to be more general in nature, than to address any specific problems.

The PM has also blended the government's immediate response to the economic emergency caused by the COVID-19 with medium term measures it intends to take to promote local manufacturing, and self-reliance. The thrust on local markets, local supply chains and local manufacturing will be more of a policy stimulus than an economic stimulus.

Big industry, however, can be happy for the PM's assertion that the package will also focus on land, labour, liquidity and laws. Not much of that would also mean direct funding support from the government, but law amendments - like the relaxation in labour law and the land acquisition norms by some states - will be extremely industry friendly. "We appreciate the Prime Minister spoke about land, labour, liquidity and simplification of laws which are key challenges of the economy", says Chandrajit Banerjee, Director General, CII.

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Supply chain reforms for agriculture, a rational tax system, simple and clear laws, capable human resource and a strong financial system - all of which find mention in the PM's speech - are long pending and recurring demands from Indian businesses.  The argument always has been that reforms will promote business, attract investment, and further strengthen Make in India. Implementation has remained patchy, and one has to see how the COVID package will change the narrative.

As the PM said, the Finance Minister will start sharing details of the contours of the package starting tomorrow, but economic resurgence will depend on how fast, to what extent and in how large a geography, the lockdown gets lifted.

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