Prime Minister Narendra Modi has announced a stimulus package of Rs 20 lakh crore and promised a vastly different fourth phase of the lockdown.

The nitty-gritty of both will be shared with the country in the coming days — the stimulus nut and bolts will be unveiled from Wednesday by finance minister Nirmala Sitharaman and the new lockdown drill before May 18, Modi said in an address to the nation on Tuesday night.

Modi’s 33-minute address was long on lofty goals and short on details. A section of sceptical economists was struggling to explain how Modi managed to come up with a nifty, T20-like numerical neatness: a Rs 20 lakh crore stimulus package for 2020 (a BJP leader tweeted it was announced exactly 20 minutes into the address). A numerologist could not have done better.

The package is larger than the one several economists had proposed in recent weeks. Arvind Subramanian, former chief economic adviser, had said a Rs 10-lakh-crore package would be more than adequate. Former Reserve Bank of India governor Raghuram Rajan had suggested a more modest sum of Rs 68,000 crore during his recent interaction with Rahul Gandhi.

Modi has offered to put together a mountain of funds totalling roughly 10 per cent of the country’s nominal GDP of Rs 203.84 lakh crore in 2019-20. If delivered, this would compare well with the US stimulus that is estimated at 13 per cent of its GDP.

Modi’s stimulus will include the first package of measures totalling Rs 1.7 lakh crore that was announced on March 26 which monetised a part of the country’s food buffer, dipped into a pool of social welfare funds that had already been budgeted, and gave out very little new cash.

The latest stimulus package — which will be five times the Rs 4 lakh crore corpus that industry had been clamouring for — will include the financial impact of the Reserve Bank of India’s recent monetary measures. RBI governor Shaktikanta Das had estimated the value of those measures at about Rs 5 lakh crore.

Modi said “Lockdown 4 will be completely redesigned, with new rules” that will be announced before May 18, taking into account the suggestions of the chief ministers.

“We will fight the virus and also move ahead,” he said, indicating efforts to revive economic activities. “The coronavirus will be with us for a long time.… We will wear masks, we will follow ‘doh gaj ki duri’, but we won’t let the virus derail our targets,” the Prime Minister said.

What comes next Modi has indicated that his New Deal for his Aatma Nirbhar Bharat — a resilient India — will focus on land, labour, liquidity and laws. The size of his package almost equals this year’s budgeted revenue receipts of Rs 20.2 lakh crore.

Modi said the self-reliant strategy would depend on five pillars — growing a new economy, creating state-of-the-art infrastructure, setting up a technology-based delivery system, leveraging the young demography and exploiting domestic demand.

“We will make the best products, improve our quality and better our supply chain,” Modi said.

Finance minister Sitharaman is expected to unveil the new measures over the rest of the week.

Speculation has been growing over a possible Covid-19 cess on taxpayers, widening the scope of the controversial digital tax that was introduced in the form of a 2 per cent equalisation levy this year on e-commerce operators like Amazon and Walmart in order to protect local kirana stores, raising tariff and non-tariff barriers to push the cause of Make in India, attracting American companies to shift factories from China to India by relaxing land and labour laws, and raising levies on luxury goods.

Former finance secretary Subhash Chandra Garg said the government had already raised its gross borrowing for this fiscal by Rs 4 lakh crore. “This indicates that Rs 5-6 lakh crore of the total package will come from the fiscal side.”

Garg felt the bulk of the package would “come from the credit side”. “About Rs 5 lakh crore has already come from the RBI…. We will probably see another Rs 7-10 lakh crore in the form of a credit programme backed by the government for small and medium businesses,” he added.

But he reckoned the most important component would be the reform measures designed to turn India into a strong, self-reliant economy.

N.R. Bhanumurthy of the National Institute of Public Finance and Policy said: “The government has hesitatingly brought out the stimulus package. While the details are still awaited, the options before the government would be a combination of increased borrowing, printing of notes and an increase in the fiscal deficit. But it is unlikely that taxes will be raised to finance the stimulus.”

Economist Pronab Sen said: “We need to know the nature of the stimulus, over what time frame it would be (implemented), to comment upon. However, increasing the taxes at this stage would be a bad idea. When we are looking to prop up the economy, taxes, both direct or the indirect, would further slow down the economy. Any infrastructure push would take several months to get off the board. We need to know the full contours of the stimulus to understand it.”

Left economist Prasenjit Bose said: “The Union budget had earmarked a total expenditure of Rs 30.42 lakh crore for 2020-21. What needs to be clarified is whether this Rs 20 lakh crore is over and above that Rs 30 lakh crore or did the PM just announce a new budget by reducing total expenditure by Rs 10 lakh crore from the Union budget? The Prime Minister should have clarified this in his speech itself, rather than leaving it for the finance minister.”

CII president Vikram Kirloskar told a television channel that “this package is going to mean a huge amount of responsibility... we as business people need to use this money wisely and do our planning in such a manner that we create new models”.

EVERY MINUTE OF DELAY EXACTS A TOLL:

Soon after the Prime Minister spoke, news came in that a 21-year-old migrant worker had collapsed and died in Telangana on Tuesday after walking 300km.

The death was attributed to possible sunstroke. The youth was part of a group that had started from Hyderabad on Sunday for Malkangiri in Odisha. They had not eaten anything since Monday afternoon, PTI quoted officials as saying.

On Tuesday, just before the Prime Minister started speaking, Rahul Gandhi sought direct transfer of at least Rs 7,500 into the account of each migrant labourer walking back to their home state.

The Prime Minister did not mention any specifics but said “some important decisions will be announced in the economic package for every section” and he named the poor, labourers, migrant labourers, cattle rearers and fishermen.