New Delhi: The National Democratic Alliance (NDA) government on Tuesday unveiled a package of measures to accelerate economic growth, but made it clear that this would not be at the expense of fiscal prudence.
Besides the largest investment ever proposed to connect India through roads, the government announced a promised bank recapitalisation package to fix the bad loan problem of public sector banks, promised focused bank lending to the employment-friendly small-scale sector and, in a separate decision, raised the minimum support price (MSP) for wheat by 6.8%, the biggest increase in six years.
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The focus on the small scale sector comes in the backdrop of recent steps by the Goods and Services Tax Council (GST Council) to ease the burden on small enterprises. In the process, the government signalled that it is sensitive to the pressure exerted on the informal economy by two back-to-back policy moves—demonetisation of high-value currency notes in November last year and the 1 July rollout of GST—which would require some handholding. Similarly, the increase in MSP comes against the backdrop of continued rural distress triggering farmer unrest in pockets of the country.
The economic package also seeks to quell some of the caustic criticism levelled by the NDA’s political opposition, particularly the Congress, which have not only alleged mishandling of the economy, but also claimed that the government has failed to deliver on its promise of generating jobs.
