Nirmala Sitharaman to meet PM Narendra Modi for stimulus 2.0

NEW DELHI: Finance minister Nirmala Sitharaman will meet Prime Minister Narendra Modi on Thursday to finalise the stimulus and support measures to counter the severe economic impact of Covid-19.

“If the package is finalised, it could be unveiled soon after,” a government official said on condition of anonymity.

The upcoming package is likely to focus on the MSME sector, which has been the worst hit, and could include an over Rs 15,000 crore credit guarantee fund, another government official said.

This is expected to be the first of a series of measures spanning other sectors of the economy as the situation on the ground unfolds after economic activity is opened up.

On Wednesday, the government permitted many industrial and economic activities to resume operations in districts identified as green zones from April 20. Sitharaman had already announced a Rs 1.7 lakh crore relief package that includes direct cash transfers to the poor and free ration, among other measures.

She had also announced relaxations in mandatory compliances for businesses and individuals. The finance ministry held several rounds of discussions with various ministries and departments on issues faced by sectors administered by them as also industry.

Upcoming measures would be based on inputs provided by them and a task force set up by the prime minister.

Service sectors such as hospitality & tourism, aviation and exports including textiles and gems & jewellery are in focus for some relief.

Industry has sought a stimulus package of up to 3-5% of India’s GDP to revive the economy that is likely to see its worst slowdown, as per various forecasts.

Economic Package
Economic Package

One percent of GDP translates into roughly Rs 2 lakh crore. The International Monetary Fund has slashed India’s growth estimate for FY21 to 1.9% from 5.8% estimated in January. According to some estimates, the lockdown could cost the economy Rs 6-10 lakh crore in lost output.

Retail, discretionary consumption, travel and tourism, hospitality, construction and transport are among the worst affected. With the lockdown extended to 40 days in total, more sectors are feeling the pain. Only sectors dealing with essentials such as FMCG and healthcare have some support.

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