The Central government is likely to unveil another stimulus package that specialize in stressed sectors, middle-income groups in urban and rural areas, and employment generation before Diwali, said three key officials in the realize. The measures are fundamental to bolster the pandemic-hit economy, they said.
A Reuters outline said the government used to be planning to announce a fresh round of stimulus of approximately $20 billion this week.
Unlike the first two stimulus packages, this time the focal point would be on boosting demand. The third package, too, tried to create demand through the leave trip concession (LTC) route.
Sources said after several rounds of discussion inside ministries, the Centre has ruled out direct cash improve.
Another round of infusion in the form of direct cash has been discussed extensively but it used to be observed the measure used to be not really useful, they said.
Citing the balance in Jan-Dhan accounts and overall bank deposits, it used to be noticed that these were nearly fixed since April, which indicates that people’s spending has come down drastically, said a government source privy to the discussion.
As of November 4, the deposits under the Pradhan Mantri Jan-Dhan Yojana stood at Rs 1.31 trillion. The deposits in April were Rs 1.19 trillion, indicating limited transitions up to now seven months.
The government is learnt to have explored other options to help these income groups. It had proposed good and services and products tax (GST) rates be cut on consumer durables, but the proposal used to be turned down by the GST Council. So, the fresh stimulus measure could be on providing these income groups subsidised credit.
Stressed services and products sectors will get emergency credit without any collateral, and the government will act as guarantor. The government is preparing provisions for collateral-free emergency credit lines for 12-13 stressed sectors from those identified by the K V Kamath panel.
These sectors include aviation, hospitality (hotels and tourism), auto components, and textiles.
The Reserve Bank-appointed expert committee, headed by former chief of New Development Bank K V Kamath, has outlined parameters to maintain 26 sectors buffeted by Covid-19. A rough estimate says Rs 4-4.5 trillion of loans would want to be recast even after allowing for economic recovery in the coming months.
Principal Economic Advisor Sanjeev Sanyal had final month told Commerce Standard that the government used to be willing to supply some more improve.
The government is learnt to be preparing a special scheme in which it is going to subsidise, with caveats, employee provident fund (EPF) contributions for new companies and even those companies hiring employees. For example, there could be subsidy whether the employee cost to the company is up to Rs 15,000 per head. Also there’s a sure number of employees who will have to be there in the company to avail of this facility. Alternatively, these measures will be announced without extra borrowing.
The finance ministry has maintained there will be no change in the borrowing target of Rs 12 trillion even in case of extra measures.
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