Even as sections of the industry are demanding an economic package to support the economy battered by sporadic state specific lockdowns, the government is currently focused on effective implementation of the Budget proposals as they have a lot stimulus already built into them, two senior government officials said.
Sources said the idea is to get the capital expenditure going and explore the possibility of any fresh economic package later on, depending upon how the economic situation evolves. Rising Covid-19 infections have resulted in several states imposing lockdowns, which is affecting supply chains and making recovery difficult across sectors like aviation, hospitality, tourism, among others.
While the Central government has announced steps to ease imports of oxygen as well as related medical equipment, and extended the emergency credit line facility to stressed companies, another round of economic package is yet to be discussed. The Centre has advocated against imposing a national lockdown, while stressing that having ‘micro containment zones’ as a strategy to deal with surging Covid-19 infections across states is the way forward.
“We have our deliberations everyday in the Finance Ministry. The focus is on saving lives. There is no discussion of an economic package. We believe the Budget already has a lot of stimulus built in and we are focussed on delivering on that. The work with regard to a lot of disinvestment proposals is at an advanced stage,” a senior official says when asked about the need for another round of stimulus package.
“The budgeted capital expenditure in 2021-22 is higher by almost 35 per cent compared to the previous year, much of which will be spent on infrastructure sector to create a multiplier effect in the economy. This is in line with the vision outline in the National Infrastructure Pipeline, and provide a cushion against any temporary slowdown in momentum of recovery,” the official added.
Progress has been made on some of the crucial Budget proposals like setting up of a development finance institution (DFI), and raising the foreign direct investment (FDI) limit in the insurance sector to 74 per cent.
In the 2021-22 Budget Estimates (BE), capital expenditure has been pegged at Rs 5.54 lakh crore, a rise of 34.5 per cent over the 2020-21 BE of Rs 4.12 lakh crore and 26.2 per cent increase over FY21 Revised Estimates (RE) of Rs 4.39 lakh crore. “With this increase capital expenditure as percentage of GDP increased from 1.8 per cent in BE 2020-21 to 2.5 per cent in BE 2021-22,” according to the Budget documents.
Last Friday, the government said it was restarting the Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY) to provide additional 5 kg of foodgrains per month (for May and June) free of cost to beneficiaries covered by the National Food Security Act, 2013 — at an estimated cost of Rs 26,000 crore.
To provide relief to stressed companies, the Finance Ministry has also expanded the scope of a government-guaranteed credit facility to healthcare and stressed sector companies that have loan dues for up to 60 days (or SMA-1 accounts), as against 30 days earlier (SMA-0).
Responding to a query on whether another loan moratorium or other measures for the banking sector would be required given the mounting pressure on companies, Finance Minister Nirmala Sitharaman said: “Although I am monitoring the economy in a very detailed fashion on an everyday basis, at the moment I don’t have a plan.”