India's economy is facing an unprecedented crisis in the wake of coronavirus pandemic, which has prompted the government to come up with a series of economic stimulus packages since the nation-wide lockdown was imposed on March 25. Economic stimulus package is announced by a government at a time when there's a deep slowdown or a nation is facing recession. India has been under lockdown, which forced industries and business houses to shut all kinds activities, bringing the economic growth engine to a grinding halt.
The government last month came up with an economic stimulus package worth Rs 1.7 lakh crore for millions of poor, farmers, women and senior citizens. That was followed by easing of monetary policy by the Reserve Bank of India (RBI), giving much-needed relaxations to businesses.
The lockdown has not only caused immense problems for the common man but has led to shutting down of small businesses, job losses across the industry, stopping of air and rail travel and has restricted movement of people and goods.
Several economists have already said that India may have entered the recession as 40-day lockdown has caused a major downfall in consumption activity, a major driver of economic growth. The lockdown has also led to fears of banks' non-performing assets rising manifold in the months to come.
As per a Reuters poll, for the first time since the 1990s, India's gross domestic product is expected to shrink. The government is now considering another second dose of relief measures for the common man and a stimulus package for India Inc, which could be significant considering losses suffered in the lockdown period. Rating agency Icra has also estimated the country's GDP might contract by as much as 20 per cent in the June quarter and by 2 per cent in FY21.
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