Prime Minister Narendra Modi's Rs 20 lakh crore stimulus package is bigger than expectations and will reset the Indian economy, said Sanjeev Sanyal, Principal Economic Adviser, Ministry of Finance on Wednesday. Speaking ahead of Finance Minister Nirmala Sitharaman's press briefing at 4 pm on Wednesday on the stimulus, Sanyal said it is bigger than expectations and will have some degree of credit guarantees.

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"There will be credit guarantees and some degree of monetization as well. Monetization is a matter of using a calibrated mix. Monetization will be credible if done in a very calibrated way,” Sanyal told CNBC-TV18.

PM Modi on Tuesday evening announced a comprehensive economic package worth Rs 20 lakh crore, which includes measures already announced by the Union finance minister and the Reserve Bank of India (RBI), to push self-reliance and boost the economy suffering from the shock of coronavirus pandemic.

The package will see significant changes for Land, Labour and Law, Sanyal added.

“This is a rethink of the whole system. We are willing to go back to the drawing board – not just at the central level but also at the state level, you have already seen significant changes. Whether it is the APMC or labour laws or other things – many new things will be on the table. So everything is up for re-examination,” he said.

"SMEs are very important for the overall economy. The financial system has not been providing SMEs with adequate liquidity. SMEs are important for running a decentralised network," Sanyal added.

Sanyal also said that there is a substantial shock to demand all over the world and we need to respond to the shock.

"Self-reliance may mean we will need to protect some parts of the domestic supply chain," Sanyal said.

First Published:May 13, 2020 11:55 AM IST