While the first economic package by the government tackled demand concerns, second is expected to fix supply-related issues, said India's Chief Economic Advisor (CEA) KV Subramanian on Thursday. The second stimulus package is likely to be announced anytime soon, Subramanian also said at the India Today E-Conclave Jumpstart India Series. "Firstly, it's a demand side shock because households may not consume discretionary items. People will think twice before buying items like cars. Therefore, there is a demand-side shock in discretionary items," Subramanian said.
"Therefore, the government's response is to take care of demand-side needs. First part of the package focused on the vulnerable class. Now the second part is about fixing supply-side issues related to companies," he added.
Subramanian said that the government is actively working on providing liquidity support to industry in its second relief package. He had recently cautioned against the demands of a stimulus on similar lines as other nations saying that it would come at a huge cost to the economy. Monetising the fiscal deficit will have an impact on the macro fundamentals and incur significant costs, Subramanian had said. The GDP is likely to see a strong rebound in the second half and grow at 2 per cent for complete FY21, he had also said.
In March, India outlined a Rs 1.7 lakh crore economic stimulus plan providing direct cash transfers and food security measures to give relief to millions of poor hit by coronavirus lockdown. Prime Minister Narendra Modi recently held important meetings with key ministers, including Home Minister Amit Shah and Finance Minister Nirmala Sitharaman, and top government officials to discuss a second stimulus package for sectors hit by coronavirus lockdown.