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Large part of FM's stimulus package will work only in medium-term

The government and the central bank's credit measures appear to show India has gotten its priorities against a possible third wave of Covid-19.

Madan Sabnavis, chief economist, CARE Ratings (Photo: PHOTO CREDIT: Kamlesh Pednekar)
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Madan Sabnavis, chief economist, CARE Ratings (Photo: PHOTO CREDIT: Kamlesh Pednekar)

Madan Sabnavis
Finance Minister Nirmala Sitharaman’s new deal as Covid-19 relief is based on three prongs: More guarantees by the government to improve flow of credit to vulnerable and important sectors; direct action when it comes to health; and support for the poor and farming community. These measures are timely and will help alleviate the hardships of the concerned sectors. But these again are supply side measures and not on the demand side. A large part of the package will work only in the medium-term.

The focus on guarantees is quite remarkable as this was launched in a big way last year