India gears up to extend stimulus packages for worst-hit sectors

Neighbouring India is in the midst of conceptualising stimulus packages for the worst-hit segments of the economy, a move that would assist sectors that are heavily impacted by the pandemic to move towards a revival path.

Indian media yesterday reported that the country’s Finance Ministry is currently putting together proposals to help uplift the hard-hit sectors such as tourism, aviation and hospitality, while also supporting the small and medium-sized companies.

While the Modi government has made no formal announcements in this regard, the Indian media highlighted that the discussions are at preliminary stages and no timeline has been announced as yet.

As India emerged as the hotspot for the COVID-19 spread, with the latest wave sweeping through the country, the country’s most industrialised states such as Maharashtra and Tamil Nadu have imposed tight restrictions to contain the spread.

Due to the recent turn of events that has resulted in increasing unemployment and contracting savings of consumers, the economy is unlikely to record double-digit growth this year, according to economists.

The International Monetary Fund (IMF), which expected the Indian economy to grow by 12.5 percent by end-2021, could also be revisiting its forecast come July. The Reserve Bank of India (RBI) however is expecting a growth of 10.5 percent by end-2021.

According to Indian media, the weakening growth projections have prompted policymakers to embark on rolling out support activities, especially when the country manages to bring down the number of COVID-19 cases and casualties.

Last month, India’s Finance Ministry eased rules for capital expenditure by government departments, an attempt to boost spending in the economy.

Meanwhile, the RBI has come under pressure to ease loan repayment rules, especially for sectors heavily impacted by the ongoing pandemic.