Government Mulls For Next Level Economic Package

In a series of meetings between Prime Minister Mr. Narendra Modi with top-level cabinet ministers, including Home Minister Amit Shah and Finance Minister Nirmala Sitharaman, and top officials of the government to finalise the second economic package targeted at sectors most affected by the lockdown to check Covid-19 spread.

The meetings involving Shah, Sitharaman and other officials of the key economic ministries are taking place for the last few days and the idea is to get inputs on the impact of the current lockdown on different segments of the economy and identify immediate measures required as a relief and revival strategy, sources privy to the developments said.

With the government permitting economic activities from May 4 by dividing the country into red, orange and green zones, the immediate concern is to support specific sectors through a package, so businesses regain lost gro­und and economic activities gradually return back to normal. The government is looking at giving a boost to the investment climate through a series of reform initiatives.

The Finance Ministry has suggested to the PMO to set up a dedicated fund for micro, small and medium enterprises that could be used to provide both interest-free loans to identified industries as well as capital support required to bring enterprises back in business after the lockdown. The size of the fund would be large to extend help to a large number of entities.

The MSME fund may also be used to provide interest subvention on loans taken by the sector to reduce their burden and allow some of these labour-intensive segments to operate smoothly.

“The contours of the package are being finalised, and the actual timing of the announcement is still to be worked out. But it would be done soon,” said a source.

Though the next government package is expected to be much wider to cover the concerns of the India Inc., particularly the worst-hit travel and tourism, hospitality and aviation sectors, sources said the Centre may adopt a phased approach to see only such measures immediately benefit a sector are announced first.

There is wide speculation the next economic stimulus package could be bigger than the Rs1,70,000 crore worth of schemes announced by FM Nirmala Sitharaman in late March, focusing on providing food security to the poor and giving money in their hands to fight the pandemic.

Meanwhile, the PM deliberated on ways to reform the farm sector with emphasis on agriculture marketing, access of farmers to institutional credit and freeing the sector of curbs with appropriate backing of laws.