2nd economic reset since 1991: Sanjeev Sanyal reveals agenda behind Modi’s Rs 20 lakh cr package

The reforms of 1991 under then Prime Minister PV Narsimha Rao government saw major economic liberalization in India.

Prime Minister Narendra Modi-led BJP government announced a mega Rs 20 lakh crore economic stimulus on Tuesday to help the countrymen tide over the coronavirus pandemic. While the package itself is intended towards helping varied sections of the society, the Modi government has a larger agenda behind the booster package as the government looks to build a stronger economy in the aftermath of coronavirus, Sanjeev Sanyal, Principal Economic Advisor to the Ministry of Finance, told CNBC TV-18. Calling it an “economic reset”, he also said that this will be the second reboot to Indian economy after reforms of 1991.

WATCH | PM Modi’s economic package EXPLAINED

The reforms of 1991 under then Prime Minister PV Narsimha Rao government saw major economic liberalization in India with the country opening its doors to foreign investments. India had sought a bailout from the World Bank and International Monetary Fund in December 1991 and was given the same on the condition that its economy become more market and service-oriented and the country expands the role of private firms and foreign investments. Responding to the conditions, then Finance Minister Manmohan Singh reduced import tariffs, deregulated markets and made India friendlier to foreign investors. However, with yesterday’s announcements, Prime Minister Narendra Modi has brought the focus again on the local and becoming self-reliant. According to Sanjeev Sanyal, self-reliance may mean protecting some of the domestic supply chain.

Meanwhile, Finance Minister Nirmala Sitharaman is to provide more details of the package today evening. “With the package, various sections of the society and economic links will get support,” PM Modi said yesterday. The focus will be mainly on land, labor, liquidity and laws and according to Sanjeev Sanyal, significant changes in land, labor and law are on the anvil. PM Modi also said that the package will strengthen India’s cottage industries, home industries, small and medium enterprises (SMEs) and other industries. Narendra Modi’s economic package was hailed by industrialists such as Mahindra Group chairman Anand Mahindra, Paytm’s Vijay Shekhar Sharma and RPG Group’s Harsh Goenka.