Govt suggests more boosters on the anvil1 min read . Updated: 14 Oct 2020, 05:39 AM IST
Centre signals intent to steady the economy amid a raging pandemic
NEW DELHI: The government is not ruling out the possibility of another set of economic stimulus to steady the economy, a senior government official said, a day after the finance ministry announced steps to boost consumer spending and capital expenditure.
The government’s willingness to offer more measures assumes significance given that the Union budget exercise for the next fiscal has already begun. “We are not closing the option of another stimulus if needed," said the official, who spoke on condition of anonymity. The assurance from the Narendra Modi administration comes in the context of the Reserve Bank of India on Friday announcing a host of steps aimed at boosting liquidity support to financial markets and to key sectors of the economy.
Experts are noticing an improvement in economic activity. “We are seeing a slightly more than anticipated improvement in economic activity independent of the second set of stimulus measures. Taking into account this as well as the steps announced on Monday, we have lowered the range of economic contraction from our earlier projected 10.4%-11% to 9.4-10%," said Abheek Barua, chief economist at HDFC Bank.
N.R. Bhanumurthy, vice-chancellor of Dr B.R. Ambedkar School of Economics in Bengaluru, said the government has been showing readiness to intervene when needed and has front-loaded the expenditure. “There is a view that the steps taken are not sufficient, but there is no consensus among experts on which sector to bail out and how. The government and RBI have taken steps to leave more cash in the hands of the poor and give liquidity support to small businesses," said Bhanumurthy.
The government on Tuesday allowed 20 states to raise ₹68,825 crore through open market borrowings. The borrowing permission up to 0.5% of their gross state domestic product (GSDP) without any reform conditions was given to the states that opted for bridging their goods and services tax (GST) revenue shortfall due to the 2017 tax reform through borrowing.