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Home / Business / Covid: Government mulling another round of stimulus measures

Covid: Government mulling another round of stimulus measures

Finance ministry officials said they were keeping a close watch as the second wave is different, and the response will also have to match the needs of the time
Nirmala Sitharaman.

R. Suryamurthy   |   New Delhi   |   Published 18.05.21, 01:56 AM

The Modi government is mulling another round of stimulus measures, which could include direct benefit transfer, higher infrastructure spending, including speeding up the implementation of the National Infrastructure Pipeline, among the fiscal options.

Finance ministry officials said they were keeping a close watch as the effect of the pandemic in the second wave was different from last year and the response would also have to match the needs of the time.

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However, an official said, “It is early days to estimate quantum and the kind of measures to be undertaken.”

The first wave was largely an urban phenomenon, but with cases now appearing in rural areas, the impact could be serious.

The rural economy accounts for 46 per cent of the country’s national income.

Analysts said providing rations and direct benefit transfers could soften the blow. Middle-class families have spent large sums on medical treatment and safety measures against Covid.

The government should extend a helping hand on these costs, they said.

Sources said the Reserve Bank of India (RBI) and finance ministry officials were working on new relief measures for stressed borrowers in case the lockdowns are prolonged.

With the goods and services tax collections going up, the government could also consider lowering tax rates on some items. The issue is likely to figure in the GST Council meet later this month.

Moody’s prediction

Moody’s Investors Service on Monday said if the second wave of the pandemic does not decline to more manageable levels and results in a prolonged and wider lockdown, it will have a more severe effect on companies’ earnings recovery.

Earnings have seen a rising trend since October 2020 following the easing of national and state-level lockdowns. But renewed restrictions in many states will weaken demand for goods and services, and disrupt the recent recovery trajectory.

However, according to an article, authored by RBI deputy governor M.D. Patra and other officials, the resurgence of Covid-19 has dented but not debilitated economic activities in the first half of Q1 of the current fiscal even though caseload of infections is much higher than before.



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