Those of you who remember Margaret Mitchell’s Gone with the Wind would know that every calamity brings two kinds of people into focus. One category is dominated by people like Scarlet O’ Hara—the ones whose lives are turned upside down but they continue to battle on in the hope that tomorrow is another day.
Then there are the Rhett Butlers of the world, the kind who treat a tragedy as an opportunity. Their philosophy is summed up by this famous Butler quote: “I have told you before that there were two times for making money, one in the up-building of a country and the other in its destruction. Slow money on the up-building, fast money in the crack up.”
So, if you revisit Prime Minister Narendra Modi’s speech on Tuesday night (May 12, 2020), it would become clear that he wants India to be Rhett Butler of the corona era, not Scarlet O’Hara. Like everyone else in the world, Modi has realised that the coronavirus pandemic is both a calamity and an opportunity.
But, the problem with Modi is that his theory is often better than the implementation, and sometimes his ideas remain just that. This is primarily because Modi gets caught in creating headlines, alliterations and catchy slogans, and acronyms. Also, since he loves to exaggerate, we know that Modi’s 56 inches actually means something else.
All these traits and their effects are visible in the aftermath of Modi’s ₹“20 lakh crore” stimulus announced on Tuesday. What sounded like a great idea, a grand strategy on the night it was expounded, has turned into a damp squib, at least so far.
After keeping the markets waiting for several weeks, Modi declared this was India’s moment to become self-reliant and take over the global supply chains. In theory, these are valid arguments. The global scramble for medicines, protective equipment and ventilators has shown that every country needs to be prepared for feeding the domestic demands in an emergency. Also, as Rhett Butler said, the world is in the middle of a crack up—old businesses are falling, supply chains are being redrawn and a clear fight between the Chinese bloc and the rest for hegemony over global trade appears imminent. So, there is an opportunity waiting to be explored and exploited.
Modi announced his government will bring about revolutionary changes in land, law, labour, liquidity—notice the alliterations— and a few more areas. He said the time is now ripe to become “vocal about local”—notice the lyrical ring to the slogan—and turn adversity into opportunity for rebooting India. So far, so good.
On the night the PM revealed his stimulus package, there was all-round euphoria, especially on new and business channels. But, a strange thing happened next morning.
Instead of flying away, the stock markets reacted with extreme caution initially and later fizzled out. A day later, the market tanked, showing that gloom and doom were back in vogue after a few hours of cheers. What was meant to be Modi’s tryst with destiny moment turned out to be a footnote that may soon be forgotten.
Why did this happen?
One, the ₹20 lakh crore stimuli was actually nothing more than the sum total of past announcements, liquidity measures, credit guarantees temporary reliefs—like relaxation in filing tax returns or deduction of employee provident fund— and some catchy slogans. Also, the details were kept hazy, only to be announced by finance minister Nirmala Sitharaman later.
There are stimulus packages and there are stimulus slogans. In the US, for example, the government fired a financial bazooka that gave its residents several direct reliefs totalling 10 per cent of the country’s GDP. This was followed by another intervention by the US Federal Reserve of around $1.3 trillion. The highlight of these US packages is this: the money goes straight into the pockets of the affected individuals and businesses, thus helping them deal with the financial trauma of COVID-19.
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But, the Indian government’s real relief package is more an example of accounting tricks than honest intent. Its first tranche of the package announced on Wednesday, for instance, is about asking banks and non-banking finance companies to open the taps for loans to medium and small enterprises. So far, it has amounted to nothing. Wary of giving loans to enterprises, banks have been depositing the excess money available to them with the RBI, creating a comical cycle where money keeps getting transferred between lenders.
In addition, it has frontloaded all the relief—imagined and real—that would be rolled out a period of several years, making the package look much bigger than what it is. For instance, the actual burden of the ₹5.94 lakh crore package announced for medium and small enterprises is just about ₹24000 crore—a quarter of the announcement.
Unlike in other countries like the US, the relief is either a fresh provision for loans or a moratorium on the repayment for a few months. In the end, it has to be paid back, if not today than at a later date, with interest. For businesses reeling under a lockdown, this is just minor relief. Businesses are clamouring for waivers and bailouts, not temporary relief. They are hoping that the government will compensate them for the loss in sales because of 50-days of near washout. They are hoping that he would open his coffers to revive growth that’s likely to contract by 4-5 per cent and turn negative in the current financial year. But, nothing of that sort is on the horizon.
In the absence of a bold plan backed by money, Modi’s desire of turning India into the next Rhett Butler of the global stage, making it self-reliant would be soon gone with the wind. And, Indian businesses may all become O’Haras of the pandemic—without the luxury of another day.
Beyond those headlines, alliterations and lyrical slogans, maybe the truth of our times is captured by another Rhett Butlerism: Frankly, my dear, I don’t give a damn!