The allegedly Rs. 20 lakh crore — equivalent to 10 percent of GDP — stimulus package announced on national television and radio and presented to the nation by the Union finance minister Nirmala Sitharaman in tranches over five days, not only plunged the Sensex by over 1,000 points but also confused if not dumfounded the public. For a start, the best estimate of over a dozen rating agencies, brokerages and fund managers is that the actual additional amount injected into the economy by the BJP/NDA government is Rs.2 lakh crore — equivalent to a mere 1 percent of GDP.
During the course of Sitharaman’s several post-presentation media briefings, the minister repeatedly emphasised that the thrust of the stimulus package was to urgently release collateral-free working capital credit to MSMEs (micro, small, medium enterprises) with good track records suffering temporary cash flow problems. To test the impact of this policy statement, your editor parlayed with the branch manager of Indian Overseas Bank with whom this publication has been banking for over 20 years, for a stand-by credit facility — just in case.
Unsurprisingly, the branch manager whipped out a 37-point ‘check list’ of documents and data required by the bank to entertain the proposal. Apart from the standard memorandum and articles of association, three years’ balance sheets and tax returns, directors’ details and IT returns, the check list demanded a guarantor’s statement, RBI defaulters list, copy of search report at ROC, industrial scenario and SWOT analysis. But surely given our 20-year association and debt-free balance sheets, these requirements could be waived? Moreover, given our excellent track record of availing credit against our own deposits/savings, an emergency stand-by credit facility could be made available? On the contrary, the package provides for additional credit to existing debtors, he countered. EW’s debt-free record disqualifies it from stimulus package benefits.
Forty years ago as founding-editor of India’s first business magazine (Business India), your correspondent warned that risk-averse government clerks can never transform into bankers. Between proclamation and practice, a long shadow continues to fall.