May 24, 2020
The Real Agenda of the Financial Package

Sitaram Yechury

THE financial package announced in five instalments by the finance minister details PM Modi’s grandiose announcement of a Rs 20 lakh crore stimulus package. This announced package, once again, reconfirms that Modi and the BJP central government are using the Covid-19 pandemic and the national lockdown to further its Hindutva agenda coupled with an aggressive pursuit of neoliberal economic reforms. 

The period of the national lockdown, in the name of combating the Covid pandemic, was used by the RSS/BJP to further sharpen the communal polarisation by targeting the religious minority community of Muslims in particular. 

Secondly, this period has been used to target all those who played a prominent role in organising the peaceful protests against the CAA/NRC/NPR. They are being arrested under draconian provisions. Once again, there is a communal profiling that is viciously being implemented in these arrests, as well. 

Thirdly, all voices of dissent, all activists championing democratic rights, civil liberties, the rights of the minorities and the marginalised sections are being booked under laws like Sedition Act, UAPA, NIA, arrested and jailed.  Media persons, who expressed opinions of dissent against the government and its policies are harassed, victimised and booked.  Alongside such attacks on democratic rights and civil liberties are the changes in the legal provisions of rights to the working people, particularly the working class.  During the period of lockdown, labour laws have been unilaterally changed. Some BJP state governments, in fact, have suspended all labour laws for a period of three years.  Such is the brazen attack on the hard-won rights of the working people that is taking place under the cover of combating the Covid-19 pandemic. 

Fourthly, the lockdown period has been used to further strengthen the drive for centralisation of all authority and power by the central government, completely negating the rights of the elected state governments and the principles of federalism which are the basic feature of our constitution.  In its drive to establish a totalitarian unitary State, all decisions are being taken unilaterally by the central government and the PM and the states are burdened with bearing the consequences of such unilateral decisions.

This is the real agenda that Modi and his government are pursuing when the single-minded focus of the government, people and the country should be to contain this pandemic and save human lives. This is being undermined by the RSS/BJP central government led by PM Modi. 

This package of economic stimulus has been put forward by Modi, in the name of promoting India’s self-reliance.  He, as is his habit of claiming every concept as his original contribution, announced self-reliance as something new that he is advancing. The concept of self-reliance in India, economic as well as in all other spheres, was an integral feature of India’s freedom struggle.  Since the days of Dadabhai Naoroji and the drain of India’s wealth under the British, self-reliance remained an integral part of the vision of an independent India. Self-reliance is contained as one of the foundational pillars of our constitution. 

But, Modi’s Rs 20 lakh crore financial package, far from strengthening India’s self-reliance, makes India more subservient. These proposals directly promote profit maximisation by foreign and domestic corporates. In the process, they also create avenues for further strengthening the obnoxious levels of crony capitalism that we have been seeing under the Modi government during the last six years.  These proposals are nothing but a mega loot of India’s national assets. All areas of our domestic economy have now been opened up for FDI automatically upto 74 per cent, including defence production and atomic energy. All public sector undertakings are to be privatised.  These, in themselves, create avenues for mega corruption scandals that are bound to grow. This financial package of subservience is being projected as the Modi-Covid-cure!

This package has been announced by the Modi government in the context of containing the pandemic and providing relief for the people.

Health Facilities: Containing the Covid pandemic entails first of all that we strengthen the health provision systems and sectors. A national lockdown is not the cure for the pandemic. It only provides time for proper preparations to strengthen ourselves to contain the pandemic and save lives.  This required that our doctors, nurses and health workers are properly equipped and protected with personal protective equipments (PPEs).  This, unfortunately, till date even after 50 days of the national lockdown, has not happened. 

Hospital Space: Containing the pandemic means that our hospital space to treat the positive cases should expand substantially. Today, the Indian situation is such that there are 0.8 doctors and 0.7 hospital beds per thousand people.  This is woeful.  The lockdown period should have been used to augment our health facilities. But the Modi government has not done anything in that direction. Many countries in the world have commandeered private health facilities for public use to meet the pandemic challenge.  Spain has gone to the extent of nationalising all private health facilities in the country. Nothing was done in India by the Modi government to seek the private health providers to share this burden of containing the pandemic. There is an acute shortage of ventilators that are so crucial in saving lives of Covid-infected patients. 

Testing: The period of lockdown should have been used to test people for positive cases in a big way. Even this has not happened. Today, India remains one of the countries with the lowest testing rate. We are testing around 1,700 out of 10 lakh people. Many countries test tens of thousands in a population of one million or 10 lakhs.  Spain tests more than 50,000 per million. China is now, again, testing universally everybody, in preparing to meet a second wave, in Wuhan where the pathogen was first located. Testing is important in the sense that it would enable India to identify the clusters where the pandemic is growing rapidly, to isolate them and to quarantine and treat people. This, unfortunately, has not happened.  When the lockdown began, India had around 191 positive cases located in 91 districts. Today there are more than one lakh spread over 550 districts. Since May 8, on an average, 3,600 cases are being reported as positive. The lockdown period to strengthen our capacities to contain the pandemic, hence, has been wasted by the Modi government.

Abandoning universal health care: In spite of this reality, this financial package provides very little for creating a universal health care system, so crucial for a healthy India. Apart from speaking of “wellbeing sectors” and laboratories in all districts of the country, there is not a paisa of resources to be spent on improving health facilities. The central government today spends less than one per cent of our GDP on health. This ought to have been increased through this package to at least three per cent of our GDP.  But then, the Modi government’s pre-occupation is to advance its agenda rather than provide the lifeline of help and relief to India’s poor. 

Conditions of the People: The other aspect of the context in which this financial package has come, is the condition of the people.  Since the days of the partition of India, such a massive number of people walking thousands of kilometres to reach their homes has not been seen.  Many have lost their lives.  Lakhs are still walking after 50 days suffering hunger, starvation, exhaustion and falling as victims to accidents.  The Modi government has refused to provide free transportation to these brothers and sisters of ours.  This financial package does not address this unprecedented human tragedy on the Indian roads today.  Neither does it address the growing hunger amongst our people. 

Unemployment: The CMIE estimates that during the lockdown period, the number of unemployed have grown by a whopping 14 crores.  The Azim Premji University has estimated that eight out of ten workers in the urban centres have lost their jobs.  Crores of daily wage earners, petty traders, hawkers have all lost their livelihood.  Many skilled workers, media persons have lost jobs, others forced to accept pay cuts. This financial package does not address this human tragedy adequately.

CPI(M)’s Demands

In this context, the CPI(M) had been demanding a direct cash transfer of Rs 7,500 to every family, outside the tax bracket, every month for three months.  This would provide some money to them to stay alive.  Further, given the spread of hunger and malnutrition, the urgent need is to provide free foodgrains to all the needy.  10 kilograms of foodgrains per individual per month should be provided free for six months from the stock of 77 million tonnes of foodgrains in central godowns.  The migrant workers must be transported free of cost to their homes.


By definition, a financial stimulus means that the government of the day spends over and above what has already been approved as the budgetary expenditures for the financial year. The entire package consists mostly of re-packaging of the schemes already announced. The emphasis is through provision of loans by the banks and the financial system and not direct expenditure that the government will undertake.  Strictly speaking, these are all the subject matter of the country’s monetary policy, which is periodically announced by the Central Bank – the Reserve Bank of India.

The actual extra expenditures have been calculated to be less than Rs 2 lakh crores, i.e., less than one per cent of the country’s GDP.  Various economists have differently calculated the actual government expenditure and all of them fall within the range of 0.8 per cent - 1.5 per cent of the country’s GDP.  This stimulus package in the conditions of today is hardly any stimulus.

The expenditure budget approved by the parliament, this year, is Rs 30,42,230 crore.  A stimulus should mean something over and above this amount. One does not know whether these budgetary expenditures were actually undertaken or not.  Clearly, the government’s revenues have drastically fallen even before the Covid pandemic. They have become worse during the lockdown.  So, how much of this extra expenditure will materialise is very uncertain. Strictly speaking, the government must come out with a budgetary statement showing  its revenues and expenditures to estimate if the so-called “stimulus” will actually materialise or not. 


Every single sector, as stated earlier, is now opened up for FDI and domestic private corporates. This privatisation is like the sale of national assets to meet the daily expenditures of the government. This is like a farmer selling his land to meet his day-to-day expenditures.  This makes neither economic sense nor common sense. This, however, is the pathway for ruthless profit maximisation.

In order to ensure that the opposition to such loot does not grow amongst the working class and the working people, all the labour laws, including the eight-hour work day and importantly the hard-earned rights of the working class, are being annulled. This is a combination of outright loot and totalitarian attacks. 

Agriculture: Instead of addressing the agrarian distress through public investments, yet again, loan facilities for the farmers are being made available.  Farmers, already committing distress suicides because of the debt burden, are most unlikely to avail of any fresh loans. 

At this moment, the rabi harvest has come in.  This is not being procured at the declared MSP by the government. There is no word in this package about this. The kharif season will begin from June. There is a severe shortage of seeds and other inputs. No measures to provide to the farmers are there in the package.

The package talks of cold storages, marketing, but importantly seeks to remove the Essential Commodities Act and allow free movement of foodgrains across states on the basis of unregulated pricing.  This has serious implications for the country’s food security in the future. 

Attacks on the states: The state governments are in the forefront of combating the pandemic.  Instead of allocating any resources to be transferred to them, the package does not even assure the payment of legitimate GST dues to them. The states have now been allowed to increase their borrowings from three to five per cent of the state GDP.  However, this increase of the ceiling means little because as this borrowing has to be undertaken on a commercial basis, the high interest rates will push the states into a greater debt burden.  The RBI should take steps to buy the bonds issued by the state governments at the declared repo rate.  This package does not refer to this. What is worse is that the central government is now taking credit for the statutorily mandated transfers under the Disaster Relief Fund to the states as a stimulus package, or, the centre’s “generosity” to the states.  The centre must immediately transfer the thousands of crores of rupees collected to combat the pandemic in a private trust named after the PM, to the states.

There are various aspects of this package that can similarly be analysed to show that most are all long term measures and have nothing to do with providing any immediate stimulus, neither to the economy, nor, relief to the  suffering people.  Other aspects of the package will be analysed separately.


The CPI(M) had put in the public domain its suggestions for an economic roadmap to be followed in the current situation.  Forwarding this to the president and prime minister of India and to the leaders of opposition parties, we had put forward “an economic plan that needs to be undertaken immediately by the government. The economic crisis and the associated people’s agony must be met by measures pertaining to the immediate tasks, medium term measures and the long term measures. These three however have to be initiated right now.

“The CPI(M) is calling upon the central government to immediately consider these proposals that merit serious attention for our economy and the welfare of our people.
“The CPI(M) appeals to all sections of our people, political parties and people’s movements to rally together to pressurise this BJP led central government to implement….”

This roadmap identified correctly that the basic problem plaguing the Indian economy, which was already entering a recession before the pandemic, is the sharp decline in the levels of the domestic demand.  The purchasing power in the hands of our people declined so sharply that this lack of demand in the economy led to closures of industrial units across the board and large-scale loss of jobs even before the pandemic. This situation worsened during the national lockdown.  So any economic plan in the immediate, short term and long term, needs to address this crucial issue of revival of the economy based on increasing the purchasing power in the hands of the people. 

Public investments: This can happen not through the provision of loans but through direct government spending. Programmes of massive public investment must be undertaken to build our much-needed infrastructure.  Leaving this to private capital can never succeed as the gestation lag (the time taken for investments to generate profits) is too long for them to bear the interest charges on the capital they will raise through loans.  Therefore, in every developed country in the world – from the USA to People’s Republic of China – the State played the primary role in building this infrastructure through public investments.  This is what should be the approach of any financial package in today’s conditions.

Such public investments would lead to the creation of crores of new jobs to build the infrastructure. Once the workers start spending their wages, domestic demand would start rising and this, in turn, would lead to the process of re-opening our closed factories and the MSMEs.

Instead, the government’s financial package focusses on providing greater access to capital for corporates and MSMEs to invest. Anybody would invest only if they see the prospect of profits.  When there is no demand in the economy, when products produced through such investments are not sold domestically, they cannot be sold internationally because of global economic slowdown, there can be no possibilities of any profit generation.  However much the government may increase the access to finances and however much it may reduce the cost of such financing, it simply cannot work unless there is demand in the economy. 

Therefore, Modi’s Rs 20 lakh crore financial  package cannot revitalise the economy.

However, the real purport of this financial package, as stated earlier, is to re-package the earlier schemes and use the opportunity of the pandemic and lockdown to push through the faster loot of national assets while imposing greater misery and exploitation on the vast majority of our people. 

This is the trajectory that is against the interests of India’s economic self-reliance. This is the trajectory that is against the welfare, livelihood and prosperity of the Indian people. This is the trajectory that will facilitate a higher degree of crony capitalism with tangible benefits to the ruling party. This anti-people direction is unacceptable. Popular pressure must be strengthened on this government to change its trajectory and immediately attend to the urgent requirements of crores of Indian people in the current situation of combating the pandemic under this continued lockdown.