As the country braves the impact of the second wave of coronavirus, a stimulus package appears to be likely. The government is preparing a stimulus package with an aim to support sectors worst impacted due to localised lockdowns. Some of the sectors that may be offered the package are tourism, aviation and hospitality.
The Finance Ministry is working on proposals to support tourism, aviation and hospitality industries, as well as small and medium-sized companies, as mentioned in a report in Bloomberg. The discussions are reportedly at an early stage and no timeline has been decided for an announcement.
The second wave of COVID-19 infections has not only ravaged families, it also destroyed travel as cases started increasing in March. India's most industrialised states, including Maharashtra and Tamil Nadu, have imposed curbs to check the spread of the virus.
As state after state strengthened their restrictions, economists and rating agencies cut their forecast for the financial year. Nomura slashed FY22 forecast from 13.5 per cent to 12.6 per cent, while JP Morgan slashed it from 13 per cent to 11 per cent, UBS 10 per cent from 11.5 per cent, SBI 10.4 per cent from 11 per cent, ICRA 10-10.5 per cent from 10-11 per cent, Kotak Mahindra Bank 10 per cent from 10.5 per cent, and India Rating 10 per cent from 10.4 per cent. Moody's cut it to 9.3 per cent from an earlier projection of 13.7 per cent, and Barclays lowered it to 10 per cent from 11 per cent. However, the Reserve Bank of India retained its projection of 10.5 per cent.
Finance Minister Nirmala Sitharaman said that she is monitoring the economy in a "very detailed fashion". She held discussions with economists about a possible stimulus package, the new site stated. "We don't think the economic impact will be as serious as last year. The localized lockdowns will last at best for a month or two months. This may lead to around 1 percentage point loss of GDP compared to starting estimates," a senior finance ministry official had said earlier.
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