Days after the Union’s finance minister, Nirmala Sitharaman, said that the option of another fiscal stimulus for the current financial year remains open, a senior adviser said the ministry is working on such a package.
“The Finance Minister, in her interaction a day ago, mentioned that (about the increase in public spending). She has told us to work on that, and in fact we are working on it, “Economic Affairs Secretary Tarun Bajaj said Wednesday.” Based on the various suggestions that we have received from all of you (industry leaders), we will be working on it and I will try to do something on this front as well to provide the boost to the economy, which is sorely needed in these stressful times. ” he said at a webinar hosted by the Confederation of Indian Industry, or CII.
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Speaking at the virtual launch of the autobiography of the chairman of the 15th Finance Committee, NK Singh, Sitharaman said Monday that he has not closed the option of another stimulus package.
While the Finance Ministry has announced two stimulus packages totaling around 1.5% of GDP, the Atmanirbhar Bharat Yojana in May and the last one last week, critics have pointed to the government’s cautious fiscal response to the Coronavirus-induced recession compared to Indian and other peers. big countries.
On October 12, the Finance Minister announced a stimulus package worth ₹Rs 46,675 crore, including incentives for central government employees to spend more on consumer durables during the holiday season and higher capital spending for both the Center and the states. Credit rating agency Moody’s said last week that the measures worth 0.2% of GDP will only provide limited support to growth and highlight the government’s “very weak fiscal position.”
Bajaj said that while the government has started the budgeting exercise for the next fiscal year, it is still considering the additional spending requirement for various sectors. “We have mentioned it to the departments to boost that capital spending that has a multiplier effect. If more money is needed, we will provide it in our revised estimates. The challenge obviously now is to ensure that the departments that are responsible for spending on infrastructure actually spend this money, “Bajaj said.
Madan Sabnavis, chief economist at Care Ratings, said that any government stimulus is more likely to be in the realm of sector-specific policies rather than a measure that affects revenue or spending. “As we are seven months into the year and preparations for next year’s budget are underway, any measure is likely to be fiscally neutral,” he added.
The Ministry of Finance began the process of preparing the budget for fiscal year 22 on October 16 with pre-budget meetings with ministries and departments. This will be the third budget of the finance minister Nirmala Sitharaman and the eighth of the government of Narendra Modi.
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