KEY HIGHLIGHTS
Noting that India needs to be competitive globally in her initial remarks, Sitharaman made amply clear that government is eyeing a major chunk of investment exiting China and effecting policy change to attract them.
Among the big bang decisions that would attract foreign investors' eyeballs, the Finance Minister announced to raise FDI in defence production to 74 per cent from 49 per cent now and opened the coal blocks and other minerals for private players. For evacuating coal from pit-head to plants, the government would spend Rs 50,000 crore in building transport infrastructure.
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While policy experts termed the decisions as progressive and aimed at boosting private sector investment especially in manufacturing, they said it would not bring any money in common man's pockets to fight the Corona crisis.
"Announcements made today would push growth later on if pursued and implemented successfully. It will not bring immediate respite," DK Joshi, Chief Economist at Crisil said.
After mobile phones and electronic goods, the government has identified new items such as Solar PV and advanced cell battery storage for a push in domestic manufacturing. An incentive scheme would be worked out for promotion of these New Champion Sectors.
To facilitate foreign investment into the country, especially in the manufacturing sector, Empowered Group of Secretaries (EGoS) would be formed to fast-track these proposals and hand-hold them in setting up units across various states. The states would ensure smooth transfer of land and a slew of concessions to attract them.
A Project Development Cell in each Ministry would coordinate with investors and state governments.
As most of the announcements by the government this week have been a mix of indirect support through bank loans and policy reforms which would not bring instant relief for the people, opposition parties have taken it on firing line.
Even independent policy experts have maintained that the actual additional spending as a result of the series of fiscal stimulus announcement, under newly-coined Atmanirbhar Bharat, would be much less than Rs 20 lakh crore or 10% of GDP.
As part of the stimulus package, Sitharaman on May 14 had focussed on migrant workers, marginal farmers, street vendors and the poor. She announced Rs 2 lakh crore concessional credit boost to 2.5 crore farmers and Rs 70,000 crore boost to housing sector among various other measures. But Ranen Banerjee, Leader - Economic Advisory Services, PwC India, said that overall fiscal impact of these announcements would be limited to just Rs 4,000 crore.
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Former Finance Minister and senior Congress leader P Chidambaram has been cornering the government over its fiscal stimulus.
Taking a dig at Sitharaman, he on Saturday pointed out that Expenditure Budget 2020-21 has already provided for bee-keeping under national Horticulture Mission and allocated Rs 2,400 crore. Likewise, under Animal Disease Control Programme, the fight against foot and mouth disease has already been launched with a five year outlay of Rs 13, 343 crore and allocation of Rs 1,300 crore in 2020-21. Both schemes were announced by Sitharaman as part of stimulus to agriculture and allied sectors on May 15.
"FM may please clarify whether the sums she announced yesterday (Rs 500 crore and Rs 13,343 crore) are subsumed in the Expenditure Budget numbers or additional sums of money," Chidambaram took a jibe on Twitter.
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