Atmanirbhar Bharat- "The God of Liquidity "

Updated: May 16, 2020

Atmanirbhar Bharat Abhiyan, in my humble opinion, is a great thought aired by our Prime Minister to boost the confidence level of the people of India during the dark times of Covid-19. During his highly articulative and emotional speech he had highlighted the importance of holding the hands of poor and weaker section of the society and announced a whopping stimulus package of Rs. 20 Lakh Crore. Mr. Modi had mooted the idea of being a self-reliant and self-sufficient Bharat and highlighted the importance of empowering the local business to achieve the said objectives. Many of us had got confused by his statement on “localization” and misinterpreted it as a call to reject the products of foreign companies. Being a devote apostle of Make in India and evangelist of FDI, he had meant to encourage local productivity by enhancing the investment into India. Though he had made a curtain raiser with an astronomical figure, the actual picture is yet to be fully revealed. Mrs. Nirmala Sitharaman, Finance Minister was destined to announce the details, nuances and intricacies of the Atmanirbhar Bharat Abhiyan in several tranches.

It is a proven fact that finance is the life blood of commerce and backbone of all nations, economies, entities and individuals. The Banks and financial institutions are the flagship holders of the financial stream of India and empowering them will strengthen the financial parameters and enhance the liquidity level in the market. I would like to see the stimulus package announced by Mrs. Nirmala Sitaraman as a continuation to the financial stimulus packages of Rs.3.7 trillion announced by Reserve Bank of India during last month. The said package is not directly burdening the Government with an additional fund requirement as most of the burden is falling on the shoulders of the Banks who got the huge influx of money which had flooded to their coffers due to ease of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) and the said fund is proposed to be pumped to MSMEs in the form of loans and credits. NBFC/MFI/HFCs are also empowered with guarantee of Central Government for their instruments to raise funds from market and encouraged to use those funds to lend to MSMEs and individuals.

Social media and economics

But Immediately after the announcement of the stimulus scheme, discussions about the pros and cons spurred up in all social media platforms, airing numerous queries, most of those in following lines.

a. How tax refund can be considered as a stimulus package?

b. How extending loan can be considered stimulus package?

c. How reclassification of MSME can be considered as a part of stimulus package?

In my opinion, Yes, all the above are strong, thoughtful and bold moves to stimulate the growth potential of the economy as it enhances the liquidity in the market and liquidity is God as far as all financial activities are concerned. Following are the reasons for an affirmative answer to those queries.

How tax refund can be considered as a stimulus package?

Tax refunds in a swifter manner ensures immediate and adequate money in the hands of needy and that will enable a citizen to spend more in the market. More spending in the market is nothing but a push to move the wheels of mud laden economy. Due to tax refunds Rs. 18000 Crores got flushed to the markets and that was indeed a timely step to protect economy. Yes, it is indeed a great move as Liquidity is nothing but a living God of commerce.