Fresh economic stimulus unlikely as Centre’s focus shifts to specific sectors
While the efforts continue to bring the business activities in the country back to life, the Union government is unlikely to roll out a traditional stimulus to support the post-pandemic economic recovery. Instead, the government appears to be focusing on specific sectors to provide production-linked incentives seeking to prioritise its budget expenditure.
Pressure is building for PM Modi to initiate more actions to regain growth momentum, however, much of the government’s financial demands are being devoted to dealing with the pandemic and defence spending, particularly, amid the ongoing border tensions with China.
Reportedly, the Prime Minister has held a number of meetings with government experts and officials on a possible stimulus. Officials are planning schemes to boost infrastructural growth and development in the country by creating more demands for the sector. To achieve this, initiatives are being taken by various ministry, including Railways and Road and Transport Ministry to stimulate the strategic demand for steel and other key input materials. Furthermore, production-linked incentives are being worked upon beyond the pharma and manufacturing sector to other areas that can contribute to the development of industries, create more jobs and eventually reduce the nation’s dependence on imports.
Even though the government gradually eased its restrictions in early June, experts have stated that business is still picking up pace and customers are scarce due to the mandatory use of face masks and social distancing to contain the spread of the virus.
In March, the government announced its 1.7 trillion economic stimulus package to support the needs of the 800 million people affected by the 21-day lockdown. Later in August, PM Modi announced $1.46 trillion in infrastructure projects to elevate the sinking economy, in addition to allocating $2 billion into boosting the healthcare sector of the country. Besides these packages, the Centre introduced various subsidies including cash grants to poor farmers and cooking gas cylinders for poverty-stricken women until September end.
However, there is a need for the Modi government to initiate more efforts to revive the economy from the pandemic fallout.
Meanwhile, the Finance Ministry on Sunday said that phased unlocking of economy and implementation of the Aatmanirbhar Bharat package assisting in the much-need economic recovery of the country amid the fear of the virus.
“With India unlocking by the day, consequent demand resurgence is palpable in many sectors. Economic indicators allude to a steady recovery in almost all sectors, with some sectors shooting above their previous-year levels as well,” the Finance Ministry said in its latest Monthly Economic Review.
According to reports, India’s economic recovery picked up pace in the month of September with key indicators like GST collection, manufacturing and car sales showing positive signs of rebound from the COVID-19 shutdown.