Was the Stimulus Package the Right way to go?

As part of Aatmanirbhar Bharat, Finance Minister Nirmala Sitharaman announced a stimulus package to help kickstart the economy by assisting Micro, Small and Medium Enterprises (MSMEs) with finances. While the move was made with good intentions, here’s why we’re skeptical about it:

All in all, the stimulus will benefit about 4.7 million enterprises, which is about 7.5% of the total number of MSMEs in India. Furthermore, the MSMEs in Bihar, Uttar Pradesh and West Bengal will be even more financially pressurized in the days to come. The exodus of migrants from the metropolitan cities will result in masses of unemployed in these states, who will turn to Micro Enterprises for jobs. And the stimulus can only do so much to help.

Deficiencies in the actual stimulus aside, the finances of the government may be directed in the wrong direction here. While kickstarting industries is important, the better way to do so during this time is by creating a larger demand for products. The pandemic has caused salary cuts in every rung of the corporate ladder, and everybody has become more conscious about spending on unnecessary commodities. If the government had directed its finances towards creating a demand for products in the country rather than towards creating products which nobody might actually buy anymore, perhaps the situation would be slightly different.

Written by: Krithika Kannan