The actual additional cost of Rs 20.97 lakh crore stimulus package to the government could be just Rs 2-2.5 lakh crore, or 1-1.2% of the gross domestic product (GDP). The additional fiscal impact of these announcements could be minuscule as a large part of the stimulus package included liquidity measures, announced by the Reserve Bank of India (RBI) since February, which will not have any immediate bearing on the government's finances. Besides, the cost of some of the announcements was already budgeted for. Though, a clearer picture on the actual cost of these measures would emerge only after the government comes out with further details.
Dr DK Srivastava, Chief Policy Advisor, EY India, says, "Only about 10% or Rs 2.1 lakh crore of this stimulus can be traced as direct additional budgetary cost to the central exchequer. Nearly 5% of the stimulus relates to already budgeted expenditures. The rest of the stimulus primarily pertains to RBI's liquidity enhancement measures, government's credit guarantee programs and insurance schemes."
A Barclays report suggests that in the five tranches of announcements made since May 13, the actual fiscal impact is to the tune of Rs 1.5 lakh crore including the largest single additional cost of Rs 40,000 crore due to higher allocation to the Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS).
If we include Rs 70,000 crore additional cost incurred due to Rs 1.7 lakh crore PM Garib Kalyan Package (PMGKP) announced in the last week of March, the total additional cost to the government turns out to be Rs 2.2 lakh crore.
Apart from the additional MNREGS allocation of Rs 40,000 crore, the other major expenditures include Rs 20,000 crore allocation through Pradhan Mantri Matsya Sampada Yojana (PMMSY), Rs 10,000 crore Fund of Funds corpus for MSMEs, Rs 10,000 crore for micro food enterprises, Rs 8,100 crore Viability Gap Funding (VAF) for infrastructure, Rs 6,000 crore Compensatory Afforestation Fund Management and Planning Authority (CAMPA) fund for tribals and adivasis, etc.
An economist from a mutual fund house told Business Today that the near-term fiscal expenditure due to these announcements could be Rs 2.1 lakh crore, or 1% of the GDP. "This excludes credit guarantees, liquidity infusion for DISCOMs, TDS/TCS cuts, measures already included in the Budget this year, and the adjustment for multi-year outflows," he explains.