Prime Minister Narendra Modi on Monday took stock of the financial sector which has been hit hard by the outbreak of COVID-19 pandemic. He also reviewed the progress of a host of measures announced under the Rs 20-lakh crore Aatmanirbhar Bharat Abhiyan package to stimulate the economy and help the MSME sector and poor sections of society.
According to sources, the Prime Minister has been taking review meetings on various aspects of the economy. As part of this exercise, sources said, he had a meeting on the financial sector of the economy which is an important pillar in reviving growth and demand. All the secretaries, including the Finance Secretary, were part of the meeting and more such meetings will take place during the week, sources said.
Banks and other financial institutions are implementing the bulk of the measures announced under the Rs 20-lakh crore package. To deal with the COVID crisis, the government announced one of the world's biggest stimulus packages with a focus on the survival of the business and setting a roadmap for the revival of the economy.
The five-part stimulus package announced by Finance Minister Nirmala Sitharaman beginning May 13 comprised Rs 5.94 lakh crore in the first tranche that provided credit line to small businesses and support to shadow banks and electricity distribution companies. The second tranche included free foodgrain to stranded migrant workers for two months and credit to farmers, totalling Rs 3.10 lakh crore. Spending on agri infrastructure and other measures for agriculture and allied sectors in the third tranche totalled to Rs 1.5 lakh crore.
The fourth and fifth tranches that dealt mostly with structural reforms including relaxation of foreign direct investment (FDI) limit in defence, privatisation of six more airports, and fully opening up coal mining to the private sector. As a result of all these measures, green shoots are visible in the economy which is expected to contract by 4.5 per cent during the current fiscal.
Last month, Prime Minister Narendra Modi had said that the economy is showing "green shoots" as the country emerges from the coronavirus lockdown and underscored the importance of being focussed on both life and livelihood. While addressing chief ministers and Lt Governors of 21 states and union territories, Modi had said the danger of the virus is not over yet, and there was a need to remain vigilant while opening up the economy.
Although a pickup in economic activity has been seen, full recovery remains a major challenge as industries are functioning with lower capacities. Fresh lockdown measures announced by some states due to spurt in COVID cases have thrown up new challenges.
The government has already rationalised its expenditure for the first two-quarters of this fiscal, compressing all non-essential expenditures of ministries and asking departments and ministries not to initiate any new scheme in the current financial year stating that there is a need to use resources prudently in the wake of the COVID-19 crisis.
The revenue collections have also been lower, with GST collections for the April-June quarter declining by 41 per cent compared to the previous year.