In a bid to revive the pandemic-hit Indian economy, the Centre is likely to announce “targetted stimulus packages” for four sectors, including micro, small and medium enterprises (MSME), small businesses — shopkeepers and small traders, unorganised sector, and oil companies.
According to a report in The Print, the packages being planned are being discussed at length with officials from the finance ministry, based on the recommendations of the 11 empowered groups set up under the Disaster Management Act to take up specific tasks in the fight against COVID-19 outbreak.
Earlier, sources from the Centre told The Print that each of the 11 coronavirus response groups will include a senior representative from the Prime Minister’s Office (PMO) and the cabinet secretariat, followed by eight groups led by secretary level officers, Niti Aayog members, the government think-tank’s CEO Amitabh Kant.
Even as the losses being incurred would be tough to recover, government officials revealed that the amount being planned to be given as part of the stimulus packages are not “large” as the Centre has limited fiscal resources.
“Consultations are at a fairly advanced stage. The PMO is meeting different stakeholders, including the Economic Advisory Council to the PM, to get their views,” an official told The Print on conditions of anonymity.
Meanwhile, a report released by the Confederation of Indian Industry (CII) on Thursday (April 23) said the already plummeting Indian economy could contract as much as minus 0.9% in 2020-21 if the coronavirus crisis prolongs and lockdown gets extended further than May 3.
The CII also urged the government to initiate structural reforms to revive the economy over medium to long-term.
“While the short-term stimulus is urgently required to repair the economic damage, it may not be adequate to prepare the economy for a sustained recovery. A medium-term plan is required to build a more competitive economy with better opportunities for trade and investment,” the report said.
The full-year GDP estimates for 2020-21 range from a contraction to marginal growth of 1-2 per cent, it said.
Nothing for the biggies
Targetted intervention for specific sections which are the hardest hit due to the lockdown imposed in view of the coronavirus pandemic night be given the stimulus package but not a big amount, an official who didn’t want to be named said.
Reports suggest that the PMO is in contact with the 15th Finance Commission to discuss the post-coronavirus requirement of the economy.
“No big bang financial package will be announced. The interventions will be targetted at sectors that have been the hardest hit such as small businesses and shopkeepers. There will be something for those in the unorganised sector, those whose livelihood have been impacted badly following the nationwide lockdown,” a government official said.
Another official said that additional relief for non-banking finance companies (NBFCs), after the relief offered by the Reserve Bank of India, is on cards.
He said that the bigger firms may not benefit from these packages even if they’re a part of the selected sectors, including aviation and hospitality industries.
However, specifying that these relief measures will not be announced any time soon, he said, “That may have to be assessed at a later date. The government is likely to announce carefully targetted stimulus packages for specific sectors like MSME, NBFCs, unorganised labour and traders. The idea is to cover a large section of the population and to provide relief to sectors that generate employment.”
Relief measures to date
Hours after RBI Governor Shaktikanta Das on Friday (April 17), announced the central bank’s decision to cut down the reserve repo rate by 25 basis points to 3.75 per cent, Prime Minister Narendra Modi said measures taken by RBI would enhance liquidity, improve credit supply and help farmers, small business owners and the poor.
On March 27, Das said around ₹3.74 lakh crore liquidity on aggregate basis will be infused into the financial system to deal with the COVID-19 pandemic.
As part of liquidity infusion measures, he said, the RBI will undertake repo operation of up to ₹1 lakh crore to infuse liquidity into the market.