Government Working On Next Stimulus Package: Report

The government has received suggestions from various ministries and sectors on needed measures, Tarun Bajaj, economic affairs secretary at the ministry of financetold a virtual conference.

Government Working On Next Stimulus Package: Report

The country's GDP or gross domestic product contracted a record 23.9 per cent in the April-June period

The government is working on the next stimulus package to support the economy amid positive signs of a fall in COVID-19 cases, news agency Reuters reported quoting a senior finance ministry official. The development comes five months after the government rolled out the first stimulus package, called Aatmnirbhar Bharat, to support the economy against the damage caused by the coronavirus pandemic-related nationwide lockdown. That package included monetary and fiscal support worth Rs 21 lakh crore, which the government said was equivalent to 10 per cent of the country's gross domestic product (GDP).

Here are 10 things to know:

  1. The government has received suggestions from various ministries and sectors on needed measures, Economic Affairs Secretary Tarun Bajaj said in a virtual conference.

  2. The news comes days after Finance Minister Nirmala Sitharaman also hinted at the possibility of a second stimulus package to revive the economy, which suffered its worst contraction on record in the April-June period. 

  3. The central government has not closed the option for another stimulus package and has started doing "some kind of" assessment on gross domestic product (GDP) contraction, she said this week. 

  4. The RBI has pegged GDP contraction at 9.5 per cent this financial year, as the data on the first quarter of current financial year fully captured the damage caused by the coronavirus pandemic and related restrictions.

  5. The Finance Minister provided details of Rs 21 lakh-crore Atmanirbhar Bharat package in May. Many economists said that package was positive for the economy from a long-term perspective, with a focus on land, labour, liquidity, and laws to revive the economy. But some felt it offered very little to rescue the country from the immediate economic fallout from the coronavirus-triggered slowdown. 

  6. As part of that package, the Finance Minister announced loan guarantees worth Rs 4.5 lakh crore to help micro, small and medium enterprises (MSMEs), non-banking financial companies and power distribution firms to have access to collateral-free loans from banks.

  7. The Atmanirbhar Bharat package also included liquidity infusion of Rs 90,000 crore for power distribution companies through state-run finance companies.

  8. Additionally, the government tweaked the definition of MSMEs, recognising a larger number of businesses under the segment in an effort to push growth. Companies with investments of Rs 1 crore and turnover of Rs 5 crore would be recognised as micro- enterprises, under the aegis of the Aatmnirbhar Bharat Package.

  9. The International Monetary Fund (IMF) has projected that the country's economy will contract by a massive 10.3 per cent this year due to the impact of the virus.

  10. Last Monday, the Finance Minister announced a Rs 73,000-crore package, including advance part-payment of wages to central government employees and cash in lieu of leave travel allowance (LTC), to stimulate consumer demand and investment in the economy ravaged by the coronavirus pandemic.

(With inputs from Reuters)