NEW DELHI :
The Union government on Tuesday expressed readiness to provide a fiscal stimulus to jumpstart the economy hobbled by the coronavirus outbreak, apart from providing support to the healthcare and industrial sectors.
“To enable the government to have sufficient amount to do its cash management, the government is committed to meet its requirement to fight covid-19 whether on account of health issues, or protecting the economy and also providing necessary stimulus at any point of time," economic affairs secretary Atanu Chakraborty said. “Therefore, our raising of resources not only from markets but also from multilateral institutions and our own resources is geared towards that end," Chakraborty said, while announcing the government borrowing calendar for FY21.
The finance ministry has decided to front-load its borrowing programme by issuing government securities worth ₹4.88 trillion or 62.56% of its gross borrowing target of ₹7.8 trillion for FY21 in the first half ending 30 September. In FY20 also, the finance ministry had issued bonds for 62.25% of its full-year target of ₹7.1 trillion.
Asked when the government will directly issue bonds to the Reserve Bank of India to finance its covid-19 related expenditure, Chakraborty said: “Certainly that is not in the borrowing plan."
Finance minister Nirmala Sitharaman had last week rolled out a ₹1.7 trillion relief package, marking an aggressive attempt to limit the economic damage caused by the coronavirus outbreak and tackle the loss of livelihood of millions of poor hit by an unprecedented 21-day nationwide lockdown. The relief package, under the newly-framed Prime Minister Garib Kalyan Yojana, aims to alleviate the financial pain faced by migrant workers, farmers, urban and rural poor, and women.
Sitharaman had hinted at more measures in the coming days to derisk the economy. Most forecasters expect the lockdown to take a heavy toll on economic activity in the country with a contraction in gross domestic product (GDP) growth in the June quarter. India’s six infrastructure sectors grew at 5.5% in February, an 11-month high, before government imposed the lockdown to curb the spread of the virus.
During the month, coal and electricity output grew in double digits, while production of crude oil, natural gas and steel contracted.
On Monday, S&P Global Ratings had cut its estimate for India’s GDP growth to 3.5% from its earlier estimate of 5.2%, as it expects the damages to the economy from the covid-19 pandemic for the Asia-Pacific region to be as severe as the one during the Asian financial crisis of 1997-98. The meaningfulness of the revenue and expenditure growth assumptions made in the Union and various state budgets for FY2021 has drastically reduced because of the rapid escalation of the current crisis, said Aditi Nayar, principal economist at Icra Ltd.
“The loss of economic activity is expected to dampen tax collections in Q1 FY2021, which would constrain the cash flows of the central and state governments. Additionally, expenditure may rise sharply in H1 FY2021, especially if additional stimulus programmes are provided to dull the impact of the ongoing crisis on livelihoods and economic activity," she said.