NEW DELHI — Indian Prime Minister Narendra Modi unveiled an economic package Tuesday night worth 20 trillion rupees ($265 billion) to help the country’s smaller businesses, laborers, farmers and middle-income earners overcome the crisis posed by the coronavirus pandemic.
“This is almost 10% of the country’s GDP,” Modi said in a nationally televised address.
Details of the economic relief will be revealed by Finance Minister Nirmala Sitharaman beginning Wednesday, said Modi, who noted that it also will “focus on land, labor, liquidity and laws.”
“It will cater to various sections, including cottage industry, MSME [micro, small and midsize enterprises], laborers, middle class, industries, among others,” the prime minister added.
The special funding also includes the earlier financial schemes announced by the government and decisions made by the Reserve Bank of India to deal with the pandemic, he said.
In late March, India unveiled a 1.7 trillion rupee program for the poor that included direct cash transfers and free grain, while the RBI cut the benchmark interest rate by 75 basis points to 4.40%, the lowest in a decade.
In April, the central bank provided fresh liquidity to the economy by cutting reverse repo rates 25 basis points to 3.75%.
The new economic package also will provide a much-needed boost toward achieving a self-reliant country, Modi said. India was making no personal protective equipment when the pandemic began, he said, while the production of N95 masks was almost negligible.
“Now, it is making 200,000 each” on a daily basis, said Modi, who called this an example of turning a crisis into an opportunity.
The crisis has taught India the importance of local manufacturing, local markets and local supply chains, Modi said.
“Now, it’s time to be vocal about the local products and help these local products become global,” he said.
A self-reliant India will stand on five pillars, the prime minister said.
Modi cited the economy as one pillar, saying this brings a quantum leap rather than incremental change. He said the others are infrastructure — which should become India’s identity — as well as a vibrant demography, technology-driven systems and demand.
“The strength of our demand and supply chain should be utilized to full capacity,” he said.
India’s 1.3 billion people have remained under the world’s largest lockdown since March 25 to curb the spread of the coronavirus. Confirmed cases nationwide stand at 70,756, with 2,293 deaths.
The lockdown, initially imposed for three weeks, has been extended twice — now lasting through Sunday — with some relaxations given since April 20 to revive the rural economy.
The public soon will be informed of what restrictions will remain starting May 18 after the current stage of the lockdown expires, Modi said in his speech.
“The fourth stage of the lockdown will be totally different, involving new rules,” he said. “On the basis of recommendations received from states, new rules will be framed.”
Health Minister Harsh Vardhan said earlier Tuesday that India has built the capacity to conduct 100,000 COVID-19 tests daily, achieving the target far ahead of its May 31 deadline.
“Currently, we have 347 government and 137 private labs conducting the tests across India,” he said, noting that the country had just one such laboratory in February.
The much-anticipated economic package received praise from the country’s leading business groups.
The Confederation of All India Traders, which represents 70 million merchants nationwide, said Modi’s emphasis on “local” demonstrates the priority his government places on pushing domestic products.
“We expect a major shift … in future policies of the government, which will definitely boost the production and consumption of Indian goods,” said Praveen Khandelwal, the group’s secretary general.
Sangita Reddy, president of the Federation of Indian Chambers of Commerce and Industry, thanked Modi and Sitharaman, the finance minister, for the economic relief.
Reddy said it’s time for India to dream big. This package “strengthens the dream of a strong India,” she said in a statement. “It’s a good step towards a great India.”
Rajan Wadhera, president of the Society of Indian Automobile Manufacturers, said Modi’s announcement “will provide the right boost to demand and growth of our economy once again.”
Wadhera hopes that the auto sector will receive focused support when the finance minister announces details.
He called India’s automotive industry a strong pillar of Modi’s “Make in India” economic initiative, providing “huge contributions to GDP and employment” while relying on a highly domestic supply chain.