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Modi announces $260 billion Coronavirus Rescue Package for India


May 12th, 2020

Police officers at a checkpoint outside a mosque in New Delhi in late April.

In a televised address Tuesday night, India’s prime minister, Narendra Modi, announced an economic rescue package of more than $260 billion for a nation that, although relatively successful in controlling coronavirus infections, has been left economically devastated.

Mr. Modi was short on details but said the relief package, which amounts to around 10 percent of India’s gross domestic product and was larger than expected, would help all classes, from farmers and migrant laborers to big businesses.

He urged Indians to become more economically self reliant and harkened back to Mohandas K. Gandhi’s century-old campaign to boycott British textiles and buy Indian cloth instead.

“Be vocal about local!” Mr. Modi said. “Who can stop us from becoming a self-reliant India?”

He emphasized that India can make many products locally, boasting that the country went from manufacturing almost no PPE kits or protective masks before the coronavirus pandemic to now making hundreds of thousands each day.

Mr. Modi has been under intensifying pressure to announce a rescue package. India’s strict lockdown and the global turmoil from the pandemic have hit its economy especially hard, leaving millions of poor people unemployed. All across the country, out-of-work laborers have been pouring from cities and returning to rural areas where they hope to rely on family members to survive.

last week, a freight train crushed 16 laborers who had stopped to rest along some railway tracks. On Tuesday, seven weeks into the lockdown, long lines of laborers and their families trudged down highways in New Delhi carrying lumpy bundles on their heads and beginning journeys hundreds of miles long.

Migrant laborers were among the people who would be helped by the stimulus plan, Mr. Modi said. He promised that in the coming days India’s finance ministry would reveal all the details.

Economists said the package was bigger than they had predicted but should have come earlier.

“It’s overdue as the economic impact on India is going to be quite severe,” said Arvind Subramanian, a former economic adviser to the Indian government.

Mr. Subramanian said that India could afford to spend the money through a combination of bond issuance, borrowing overseas and central bank spending because the country is not heavily indebted internationally. And he said India had no choice.

“Imagine if you did not do this,” Mr. Subramanian said. “The counterfactual will be much more hardship and a greater hit to the economy.”

While the International Monetary Fund predicts minimal growth for India’s economy this year, Mr. Subramanian and many other economists say they think the economy, which has been growing steadily for the past three decades, will actually shrink.

Many Indians listening to Mr. Modi’s speech were eager to hear if the nationwide lockdown, one of the world’s strictest, would be lifted. Since late March, India has closed down everything from parks to airlines, and though the government recently opened some sectors of the economy, like agriculture and some industries, many Indians are desperate to return to work.

Mr. Modi didn’t directly address their concern, but he said that during the next phase of the lockdown, set to begin in about a week, rules would change.

And he hinted that the lockdown might be eased.

“All the experts are telling us that corona will be part of our lives for a long period,” Mr. Modi said in his half-hour speech. “But we cannot allow our lives to revolve around corona, corona, corona.” He urged Indians to continue wearing masks and maintaining social distance.

India has reported around 70,000 coronavirus infections and 2,300 deaths. For a country of 1.3 billion people, that is a far lower infection rate per capita than many richer countries. Though testing is lower here as well, which may mean the infection rate is higher than reported, many public health officials have said India has done a good job so far in containing the virus.