Another Financial Stimulus is Also Possible: FM Sitharaman
Just a week after announcing measures to boost consumer demand and provide liquidity to states, Finance Minister Nirmala Sitharaman said that the government has not closed the option of coming out with another round of stimulus with a view to supporting the economy amid the pandemic.
Speaking at the virtual launch of the autobiography of 15th Finance Commission Chairman N.K. Singh, titled “Portraits of Power: Half a Century of Being at Ringside”, Sitharaman said that all the announcements made so far have come after a lot consideration of inputs from different sections of the society followed by working out on them within the Finance Ministry also with the Prime Minister’s Office.
Since the lockdown was announced citing COVID-19 Pandemic situation, Government’s policymaking machinery is been working aggressively to create a support-oriented ecosystem for economic recovery. From May 2020 to a few days ago, we have witnessed announcements after announcements which are aimed to bring catalysing support to economically affected businesses and entrepreneurs. MSME entrepreneurs are effected worst with this pandemic halt and these are the most prioritised sector for the policies to revive the economy.
“I have not closed the option for another stimulus package,” she said.
On October 12, the Finance Minister announced a number of measures to induce government employees to spend in the upcoming festive season, including an ‘LTC Cash Voucher Scheme’ and a ‘Special Festival Advance Scheme’.
In May, the government came up with the much talked about Rs 20 lakh crore ‘Aatmanirbhar Bharat’ economic package. Both the rounds of stimulus so far have received flak along with appreciation from the industry and experts, as many are of the opinion that they are inadequate, more so in terms of boosting demand.
A recent Moody’s report said that that the second round of fiscal stimulus amounts to just 0.2 per cent of the country’s real GDP forecast for the financial year 2021 and in total, the two rounds of stimulus bring the government’s direct spending on coronavirus-related fiscal support to just around 1.2 per cent of GDP.
On Monday, Sitharaman also said that the government has now started assessing the GDP contraction, and will have to come up with its report, whether in Parliament or in public.