No matter how expensive the healing bandage costs, unless the mindset heals, the expense doesn't turn fruitful. Policy makers are trying their best to revive the economy but alertness of beneficiaries decides the success of any policy! Money is infused and channelised to boost the economy. People say that they are running out of money. Where is the money fuming? To other country? In lockers? Or, in gold? Or, somewhere else? Money cycle is continuous. If someone loses, someone gains.
While applying this 20lakh crore bandage, if borrowed money is diverted for productive activities then it could be easily returned with interest. But, if money is to be printed, then consequences have to be faced! Owing to present situation, everyone is trying their best to survive. Yes! to survive only. Nobody is thinking of luxury now. That means savings for survival, consumption of essentials for survival has increased. Hence, portion of the package is clearly getting utilised for consumption purpose. More the investments, the virtuous the economy gets. But, healthier the people, healthier the demography gets. The amount released for productive purposes is the amount that will help in boosting the economy at 'quantam' pace. The amount for survival purpose shall contribute towards health of population that will help in boosting the economy. So, there are two facets, Health and Wealth, that is, Savings and Investments.
Released money faces multiplier effect. Currently, velocity of money will be less. It will take time to heal. Rs 1.74lakh crore relief package under Pradhan Mantri Garib Kalyan Yojana for the economically weaker section is either piled up at bank or used/saved for survival. Additionally, free food is provided. All farmers, migrants, labourers are taken care of in paper. Hope, all are benefitted too. Government also announced Emergency Health Response Package. Under these packages, economy might not get healthy but that amount is for healthyfying the workers of economy. After all, health is wealth. No huge multiplier cycle is to be expected here. This is just a healthy virtuous cycle if beneficiaries are actually benefitted.
Other area where this bandage is applied is corporate sector. Refunds against pending income tax refunds of upto Rs 5lakh will just build up a portion of wealth. Productivity is necessary for reviving the economy. So, MSMEs have been benefitted through Funds of Funds, subordinate debt and collateral free automatic loans. Now, we have to keep a watch on them. If the amount granted is well utilised and turnover is multiplied, then it will turn into boon. But, the virus has to perish, safe environment is needed for people to work.
Next, liquidity relief through Employee Provident Fund plus reduced EPF contribution is aimed at benefitting firms. But, Alas! Most firms are unaware while few need to learn to claim the benefit.
NBFCs and Power Distribution companies too gain support. Also, RBI slashed CRR. Special Refinance Facility and Long Term Repo Operation are the other measures taken by RBI. But, they need to be utilised by banks.
The list of beneficiaries is huge, so is the list of survivors! Cost of living is rising. Price of essential food items is going up. Will that relief amount help in covering rising costs?It is just a 'relief' amount!
We consume, we produce. We are the survivors, we are the workers. Until and unless, we use the released amount to boost the economy, it will get difficult to recover. Though, not directly, but all will be benefitted through ripple effect. As money flows and starts exchanging hands slowly and steadily, the economy will recover. But, for boom to occur, money must exchange hands rapidly like it used too. We need to build our immunity and invest in productive activities to build self-reliant economy's immunity.
Hence, the bandage turns effective if we turn active and learn its proper application!
While applying this 20lakh crore bandage, if borrowed money is diverted for productive activities then it could be easily returned with interest. But, if money is to be printed, then consequences have to be faced! Owing to present situation, everyone is trying their best to survive. Yes! to survive only. Nobody is thinking of luxury now. That means savings for survival, consumption of essentials for survival has increased. Hence, portion of the package is clearly getting utilised for consumption purpose. More the investments, the virtuous the economy gets. But, healthier the people, healthier the demography gets. The amount released for productive purposes is the amount that will help in boosting the economy at 'quantam' pace. The amount for survival purpose shall contribute towards health of population that will help in boosting the economy. So, there are two facets, Health and Wealth, that is, Savings and Investments.
Released money faces multiplier effect. Currently, velocity of money will be less. It will take time to heal. Rs 1.74lakh crore relief package under Pradhan Mantri Garib Kalyan Yojana for the economically weaker section is either piled up at bank or used/saved for survival. Additionally, free food is provided. All farmers, migrants, labourers are taken care of in paper. Hope, all are benefitted too. Government also announced Emergency Health Response Package. Under these packages, economy might not get healthy but that amount is for healthyfying the workers of economy. After all, health is wealth. No huge multiplier cycle is to be expected here. This is just a healthy virtuous cycle if beneficiaries are actually benefitted.
Other area where this bandage is applied is corporate sector. Refunds against pending income tax refunds of upto Rs 5lakh will just build up a portion of wealth. Productivity is necessary for reviving the economy. So, MSMEs have been benefitted through Funds of Funds, subordinate debt and collateral free automatic loans. Now, we have to keep a watch on them. If the amount granted is well utilised and turnover is multiplied, then it will turn into boon. But, the virus has to perish, safe environment is needed for people to work.
Next, liquidity relief through Employee Provident Fund plus reduced EPF contribution is aimed at benefitting firms. But, Alas! Most firms are unaware while few need to learn to claim the benefit.
NBFCs and Power Distribution companies too gain support. Also, RBI slashed CRR. Special Refinance Facility and Long Term Repo Operation are the other measures taken by RBI. But, they need to be utilised by banks.
The list of beneficiaries is huge, so is the list of survivors! Cost of living is rising. Price of essential food items is going up. Will that relief amount help in covering rising costs?It is just a 'relief' amount!
We consume, we produce. We are the survivors, we are the workers. Until and unless, we use the released amount to boost the economy, it will get difficult to recover. Though, not directly, but all will be benefitted through ripple effect. As money flows and starts exchanging hands slowly and steadily, the economy will recover. But, for boom to occur, money must exchange hands rapidly like it used too. We need to build our immunity and invest in productive activities to build self-reliant economy's immunity.
Hence, the bandage turns effective if we turn active and learn its proper application!
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