India’s fiscal response to Covid-19 so far conservative: Report
India’s fiscal response to the Covid-19 pandemic has so far been conservative, according to a report that recommended a Rs 5.5-lakh-crore stimulus package to deal with the crisis.
The report, released by Azim Premji University, also suggested a slew of measures, including a cash transfer of Rs 5,000 for three months to as many vulnerable households as can be reached with the existing digital infrastructure, including but not limited to ‘Jan Dhan’ accounts.
The impact of the second wave is still unfolding and may be as large or even larger than the first one. Further, coming as it does on the back of depleted savings, debt, and reduced fallback options, the second wave can lead to potentially larger impacts on work, incomes, food security, health and education.
The states, which are at the forefront of the pandemic response in terms of containment as well as welfare, are severely strained in their finances.
“Bold measures will be required to emerge stronger from the crisis,” said the report — State of Working India 2021: One Year of Covid-19. “There are thus compelling reasons for the Union government to undertake additional spending now,” it said.
Grants to states
The finance ministry has said it has released the second monthly installment of Post Devolution Revenue Deficit (PDRD) Grant of Rs 9,871 crore for the year 2021-22 to 17 states.