To ramp up demand for a speedy economic recovery, the Centre may come up with another mega stimulus to target majorly-affected sectors, middle-income groups in urban and rural areas and employment generation. The latest round of stimulus could be worth $20 billion and could be announced as early as before Diwali. The Centre may list out subsidy packages to boost demand in the sluggish economy.
Direct cash transfer is unlikely, as the idea seems to have faced rejection during discussions within ministries. The idea was set aside after analysing the Jan Dhan accounts data, which suggests bank deposits remained almost constant despite coronavirus affecting business in rural as well as urban areas. In April, the bank deposit in Jan Dhan accounts stood at Rs 1.19 lakh crore, while it was Rs 1.31 lakh crore as of November 4, Business Standard reported. Similarly, the idea of helping common people by cutting down GST rates on consumer durables was also floated during the ministerial discussion but was rejected.
Now speculations are rife that the Centre may come up with subsidised credit scheme for the stressed groups. Some sectors may even get credit without any collateral, with the Centre acting as a guarantor. At least 12-13 sectors identified by the KV Kamath panel could get the facility of collateral-free credit. The most-affected sectors like hospitality, aviation, the automobile and textiles are on top of the list.
Notably, the RBI-appointed expert committee, led by former New Development Bank chief KV Kamath, has identified at least 26 key sectors that have been badly affected by a coronavirus. The central bank may also go for loan recasting of loans worth Rs 4-4.5 lakh crore. The government may also come up with a subsidy scheme for companies with regard to their employee provident fund contributions. The finance minister last month had announced a slew of measures to spur demand and ramp-up capital expenditure. This was the third stimulus package since the outbreak of the COVID-19 pandemic.
The government had announced a Rs 1.70 lakh crore Pradhan Mantri Garib Kalyan Yojana (PMGKP) in March to protect the poor and vulnerable sections from the impact of COVID-19 crisis. It was followed by the Aatmanirbhar Bharat Abhiyan package of Rs 20.97 lakh crore in May, largely focused on supply-side measures and long-term reforms. In its third stimulus package, the government last month announced measures, including the Leave Travel Concessions scheme -- that by its estimate would give a demand boost of Rs 1 lakh crore.