Finance Minister Nirmala Sitharaman will on Thursday announce the second set of measures that are part of a Rs 20 trillion fiscal and monetary package announced by Prime Minister Narendra Modi to support India’s economy, which has been battered by a 51-day lockdown to curb the coronavirus outbreak.
Sitharaman on Wednesday announced measures of nearly Rs 5.94 trillion to provide relief to small businesses, taxpayers, shadow banks, power distribution companies, real estate, organised sector employees, and contractors working with the government.
The immediate fiscal impact of Wednesday’s announcements could be less than Rs 20,000 crore, even though analysts differ on that. The key measures were aimed at micro, small, and medium enterprises (MSME), with a Rs 3-trillion credit guarantee fund for collateral-free automatic loans, a Rs 20,000-crore subordinate fund for stressed MSMEs, and a Rs 50,000-crore equity infusion “fund of funds”.
When asked how the government planned to fund the stimulus package, Sitharaman said that she would give these details, and explain how much the Centre’s own outlay in the overall package would be. “I can say that the increased borrowing will be part of that,” she said.
Last week, the government increased its borrowing programme for FY21 to Rs 12 trillion from Rs 7.8 trillion.
Modi, in an address to the nation on Monday, said the package was equivalent to 10 per cent of India’s gross domestic product, and was aimed at the multitudes out of work and businesses reeling from the impact of the prolonged shutdown.
Opposition leaders and some economists said Wednesday’s measures fell short of expectations as no relief was announced for millions of migrant workers who have lost jobs after the national lockdown.
“There is nothing, absolutely nothing by way of cash transfer to the bottom half of the population (130 million families) who have been pushed into destitution,” said Congress leader P. Chidambaram, a former finance minister.