As fiscal stimulus generally refers to additional spending over and above budgetary allocation, the measures to boost income support announced in two tranches since Wednesday do not qualify as stimulus in true sense.
Most of the measures are in the form of loans which would not benefit MSMEs, farmers or vulnerable sections of society instantly. For instance, farmers taking loans would be able to generate income through crops only after a few months from now.
"Most of the announcements made so far are in the form of enablers or facilitators. They are not direct injection into the economy," said Sunil Kumar Sinha, Principal Economist and Director (Public Finance) at India Ratings and Research.
Finance Minister Nirmala Sitharaman on Thursday announced to provide Rs 2 lakh crore concessional credit boost to 2.5 crore farmers through Kisan Credit Cards (KCC) among various other credit support initiatives for marginal farmers, street vendors and migrant workers. On Wednesday, she had announced Rs 3 lakh crore collateral free automatic loan for MSMEs.
The Centre last week raised its borrowing target for 2020-21 to Rs 12 lakh crore from the budgeted Rs 7.8 lakh crore but it is not reflecting much in the measures to tide over economic crisis triggered by the coronavirus pandemic. Moreover, measures announced by RBI to provide liquidity in the market and front-loading of income support under Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme are also part of the Rs 20 lakh crore stimulus.
Ranen Banerjee, Leader - Economic Advisory Services at PwC said that the announcements made by Sitharaman are in line with those detailed during the first tranche aimed at MSMEs, NBFCs, HFCs, MFIs and discoms.
"Overall fiscal impact is very limited to the tune of Rs 4,000 crore only. Some of the measures announced will provide long term succour to migrant labour. Effectiveness of some of the measures announced is contingent on the sentiment of the consuming class and their appetite to make non-essential investments and their risk taking ability," Banerjee said.
He had pegged the impact of Rs 6 lakh crore financial package announced on Wednesday at less than Rs 20,000 crore on FY21 fiscal deficit.
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