Analyzing The Stimulus Package

For the five successive days, Finance Minister Nirmala sitharaman has announced various measures to boost the economy and- as she repeatedly says- to fulfill the dream of Prime Minister of a new ‘Aatma Nirbhar Bharat’ or ‘self-reliant’ India. Earlier on 12 May, P.M Modi said that the package will be around 20 lakh crore, 10 % of India’s GDP. But the package is likely to cost government only 1 percent of the GDP. There is a huge difference between the benefits and the actual cost, this is due to the material benefits such as bank guarantee and permission given in the major Announcement. The total policy support of Atmanirbhar Bharat stands at nearly Rs 11 lakh crore, with a direct fiscal impact of mere Rs 1 lakh crore (0.5% of GDP). With this, the overall economic package stands at mere 0.8 per cent of GDP, said Madhavi Arora, Economist, Edelweiss.A report by Barclays also highlighted that the government’s fiscal support programme, which sums up to Rs 21 lakh crore including Rs 8 lakh crore of measures announced by RBI, will make the actual fiscal impact of only Rs 1.5 lakh crore, which is 0.75 per cent of GDP.

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Originally published at https://rachit1008.blogspot.com on May 19, 2020.