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Finance Minister Nirmala Sitharaman (file photo)
NEW DELHI: the first package in the Atmanirbhar Bharat Abhiyan presented by FM Nirmala Sitharaman On Wednesday it seems to have leaned more on banks and public sector institutions (PSB), and the budget outflow seems to be minimal.
While the Rs 3-lakh-crore auto loan for businesses and MSMEs is backed by a government guarantee, PSBs will feel the burden. Similarly, the liquidity infusion of Rs 90 billion for distribution companies will be handled by entities such as Power Finance Corporation and Rural Electrification Corporation. Even relief under the Employee Provident Fund is very much an accounting exercise and provides little relief to employees whose contribution to the plan will be reduced.
A former finance secretary said the stretched finances of the Center allowed little margin. “Because of this, you have to be innovative. You have to have everything available in the system, “he said.
When asked about the cash outflow for the first package, Sitharaman said he would prefer to wait until all the packages are announced, although he said that increased market loans could be a source of financing for the packages. Kerala FM Thomas issac He said that if the first package is a fair sample, the stimulus of Rs 20-lakh-crore will be deeply disappointing. “The actual outflow of resources directly from the Budget is around Rs 30,000 crore,” Isaac tweeted.
P.M Narendra Modi He has said that the size of the package, including those previously presented by FM and RBI, will total Rs 20 lakh crore and represent 10% of GDP. The government is walking a tightrope between demands for a large stimulus and the need to consider fiscal consolidation and the possibility of downgrading sovereign ratings should the deficit reach an unsustainable level.
Economists said the burden on the first package has been shifted to PSBs and may be households, which are shareholders of these banks. “At a time when you are reducing the number of PSBs, you are also burdening them with more responsibilities. It will be the PSBs and financial institutions that will bear the burden, ”said N R Bhanumurthy, professor at the National Institute of Finance and Public Policy. “The measures would be largely fiscally neutral this year, with Rs 20 billion of subordinated debt for stressed SMEs and capital financing of Rs 10 billion from the fund of funds, likely to be the disbursements of this year “he said Madan Sabnavis, chief economist at Care Ratings.
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