The Centre is likely to agree to an economic stimulus package of more than 1.5 trillion to fight a downturn in the country that is currently locked down to stem the spread of novel Covid-19, two sources familiar with the matter told Reuters.
The Central Government has not yet finalized the package and discussions are ongoing between Prime Minister Narendra Modi’s Office, the finance ministry, and Reserve Bank of India (RBI), said both the sources, who asked not to be named as the matter as still under discussion.
A senior government official said the stimulus plan could be as large as Rs 2.3 trillion, but final numbers were still in discussion.
PM Modi announced the three – week shut down in a late evening speech on Tuesday.
The government will also increase its borrowing plan for the fiscal year 2020-21, which starts from April 1, from the current planned gross borrowing of 7.8 trillion rupees, both sources said.
The RBI will have to buy bonds like other central banks in the world.
Finance Minister Nirmala Sitharaman is addressing the media today amid reports of an announcement of an economic bailout package to tide over the impact of coronavirus.
In her last press meet on Tuesday, Nirmala Sitharaman said: “The economic package is going to be announced soon.”
The Indian economy that had already slowed down before the outbreak of coronavirus (Covid-19), is in for a more difficult period in the coming months with businesses almost coming to a standstill. The finance ministry and RBI have taken several steps to ensure that liquidity in the system remains intact. But Industry has called for more Stimulus measures to fight depression-like conditions set in the economy.
The Stimulus package, according to some reports, will be focused on micro, small and medium enterprises (MSMEs) and daily wage workers.
To help small companies facing the threat of defaults due to coronavirus – related lockdown, the government raised the threshold that would trigger insolvency proceedings to Rs 1 crore from current Rs 1 lakh. This raising of the threshold will help small and medium enterprises, the Finance Minister said.
