Unlocking the Future – Newsletter by Flamingo Consultancy Group

Rs. 20 Lacs Cr Package- What Does It Mean For 135 Cr Indians?

A big bang announcement by PM on 12/05/2020

Followed by 5 tranche follow up announcement from FM leashing out line by line, sector wise, category wise, industry wise unfolding
Most of the announcements will have larger long term implications for growth and development of the industry, services and businesses

Many of the announcements will have near term implications during ongoing pandemic driven unprecedented time helping industry, businesses and services providing sort of scope for resumption of operations, rushing towards seamless stability of operations, bringing back pre covid-19 activities back on track and thereby ushering confidence level back to a normalcy

Some of the Announcements:

For MSME sector deserve full credit in terms of making availability of additional liquidity support, much needed basic changes to definition of MSME coverage, keeping them largely safe from insolvency proceedings till a certain financial limits

For Agriculture, marginal farmers, micro food processing units etc too get a due attention for stability and setting stage for growth

Opening up of Defense sector FDI limit to 74% from present 49%

Announcing privatization for 6 more Air ports

Opening On line education courses for top 100 Universities under automatic route

Throwing vast opportunities for online Education sector using view media and technological instruments

The biggest of all announcement in the form of strategic businesses meant for Public Sector Enterprises to be reserved in terms of participation by no more than one unit for certain category and no more than four units for rest of category. This big bang announcement leads the sky open for a Privatization route in the country for many sectors in the time to come. Let’s take a case for oil and gas marketing segment, today, we have IOC, BPCL, HPCL, ONGC, GAIL and many more units in the country in petrochemical and oil marketing segment, if reserved by Government meant for only one company, it opens for a big privatization and if reserved meant for not more than four operating companies, huge restructuring within the sector will be on the cards beneficial to the society at large.

Last 15 minutes of the announcement was a mathematical exercise of summing up of Rs 20 lacs cr, the exercise was well formulated by FM, and a sense of relief was noticeable on TV screen after getting a correct tally of this much amount of financial package on the face of FM, just like an examinee getting relieved after they sigh a sense of relief when they resolve tough question asked in the examination paper correctly.

But Here comes the true test of this package:

Let’s examine it from another angle,    

Whether 135 cr Indian public for whom this has been announced, have you heard any positive response or echo from any of them or for that matter any section of the society covered largely by the above?

Sorry, no applause from any corner of the country nor from any member of the society for that matter.

Continuing 2nd test to find out the happiness index from the affected 135 cr Indian public;

Let’s review what few of the boldest industrial leaders uttered,

first of the three leaders, Mr. Rajiv Bajaj, He expressly said that none of Indians said WOW after the package details put before all of us by FM. Do any of us want to convey anything more to government on their last 6 days announcement?

We have Mr. Azim Premji and Mr. Srinivasan of TVS group, to support the above conclusion;

They said that what Indian needs at this point of time is a cash support of Rs. 7000/ Rs. 5000 at least for next 3 months so that their basic needs can be taken care of, they can start their life again and this immediate financial assistance will undoubted and certainly drive the demand revival in the economy leading the restoration process may be much faster than one thinks of.

So, too much of the disappointment of all, this package does not reveal any immediate relief for today, tomorrow or for next few months which are of utmost need of the hour for the common of 135 cr Indians.

And last but never been the least, let’s take a call from businesses and service providers, what they were expecting from government and what’s on the platter now?

Sorry, complete ignorance, no direct benefits of any relief for delayed payment of taxes to be collected and thereby straight support of added liquidity by the government to small businesses and service providers, no relief from EPF, ESI statutory obligation payment, no blanket relief announcement for meeting compliance related issues, no expressed intent for moratorium extension from earlier 3 months announcement by a further period of say 3 or 6 more months as opening up after lockdown will take time to lead to a restoration process for the small businesses and service providers.

So, to conclude of the financial package,

A complete set of disappointment for the near term for the larger part of 135 cr Indians, while at the same time,

A big opportunity thrown open for variety of sectors for big industrial houses with intent to make large capital investment, snatching many of the reserved categories of government businesses to their own fold leading to a wave of privatization in India in a big way in next few years.

A Clear Message From the Package:

It’s a crystal clear fact that China brand has been damaged by virus and Trump is further adding to their difficulties. India needs to take advantage of the current situation. Bring large part of 135 cr Indians in the same boat offering relaxations for the shorter term helping their businesses and services resume in an orderly manner and at the same time do bigger for the medium and longer term to not miss the opportunity thrown to emerge as global manufacturing leader replacing China.

More on Medicines, Drugs and Vaccines on Covid-19 next week.