May we remain awed rather than shocked when PM’s stimulus package unfolds : 13-05-2020

Shock and awe. Inspiration and the invitation to imagine and dream. Aspirations for a world-shaping India. Understatement and subliminal messaging. All the rhetorical devices of an effective politician were present in the Prime Minister’s address to the nation at 8 pm on Tuesday. What was missing was any tangible announcement of concrete relief for the suffering mass of humanity fleeing lost jobs, penury and callous abandonment at their place of work, for the meagre but assured refuge of a distant home. Missing also was clarity on relief for the six crore tiny, small and medium enterprises that struggle to survive without work or revenue.

A stimulus of Rs 20 lakh crore is awe-inspiringly large. At first blush. But it includes the liquidity measures announced by the RBI earlier, and could announce later. That is an immediate let-down. Because all the RBI’s efforts to push several lakh crore rupees into the hands of the banks, in the hope that the banks would lend the money to struggling companies, had come to nought. Before the RBI’s extra-ordinary liquidity measures, the Targeted Long Term Repo Operations, the banks used to Rs 2.86 lakh crore a day with the RBI. After the RBI created these additional liquidity windows, the banks began to deposit, on average, Rs 7 lakh crore with the RBI under its reverse repo window.

State Bank of India offers a rate of interest of 2.75% on its savings bank account. Take money from the man in the street at 2.75% and put it in the RBI at 3.75% with no risk whatsoever. Satyam, Shivam, Sundaram. So what if the money does not reach industry?

Will the economy gain from such liquidity measures? Not unless the RBI finds a way to buy bonds directly or through a special purpose vehicle from companies.

Self-reliance was another theme in the PM’s speech, fortified with emotive appeals for vocal championship of the local. Self-reliance sounds like a virtue. But it proved to be a vice that produced shoddy goods at premium prices that could be sold nowhere in the world except to long-suffering Indian consumers who had no access to better and less expensive goods produced abroad. It is to be hoped that the government is not planning to raise tariffs and import restrictions to boost the local and land lay the ground for a repeat dose of self-harm.

Encouragingly, PM Modi spoke of India seeking self-reliance in a globalising world, seeking to benefit the world. Logically speaking, India can benefit the world either because it buys from it or because it sells to it or both. The PM had been praised, in the recent past, by a sitting judge of the Supreme Court for thinking globally and acting locally. May the final policy, when it is spelt out, live up to soaring judicial expectations without raising the price of mundane things that are imported from lower-cost economies, for the sublime pleasure of buying local and hearing the peal of happiness as the local producer laughs all the way to the bank.

The PM is correct when he says that India can lead the world. The largest population of young people who can be trained in science, technology, engineering and maths is present in India. If their creativity and passion can be unleashed and fuelled by dollops of capital, India can be a hub of research and development and new technologies, as well as of high-value services. But the example the PM gave of Indians fixing the Y2K problem was a little hurtful.

Indian IT companies used the Y2K problem to get a toehold into the outsourcing business. In the early days of computing, before standardisation had become the standard, many lines of computer code that dealt with dates designated the year with just two digits, instead of four. For them, when the year moved to 2000, instead of 1999 being succeeded by 2000, 00 would follow 99. It was feared that this could throw whole systems out of kilter, unless all the dates were changed, line by line, to the four-digit year format. Indian IT offered no technological wizardry, but sheer volumes of manpower to scan millions of lines of code and make the correction. Thereafter, of course, they graduated to more complex tasks. But to suggest fixing the Y2K problem as a high-water mark of Indian excellence at solving global problems is, well, to acknowledge the dignity of manual labour and also to confuse ‘Jai Kisan!’ with Norman Borlaug.

A crowning display of the art of understatement comes through in the assertion that the corona virus is going to be with us for many years, and that we have to learn to get on with our lives. Hey, we had shut the city down to chase and catch Jack the Ripper, but he has given us the slip. Don’t worry, Just watch out for the friendly ripper under your bed, in the back seat of the car or in that dark corner. Be watchful. Enjoy — it will be rip-roaring time for someone tonight, don’t you wish you were in that someone’s shoes?

But the PM is right. We have to live with the Corona virus, but with a vastly expanded and enhanced healthcare system, that can treat the victims. Let us hope that the stimulus package would deliver the beginnings, at least, of such an expanded healthcare infrastructure.

Source : Times of india

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