InvestorQ : Can we expect a fiscal boost to the Indian economy from Nirmala Sitharaman when the lockdown is lifted?
Ria Jain made post

Can we expect a fiscal boost to the Indian economy from Nirmala Sitharaman when the lockdown is lifted?

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Anu Biswas answered.
2 years ago
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The FM, the PMO and key ministers have been working over the last week to formulate the second fiscal stimulus to mitigate the impact of COVID-19. The primary aim here will be to ward off the prospects of recession as it could take a much bigger toll. The 21-day national lockdown ends on 14 April, although it is not clear if it could be extended further. The indications are that it could be a phased lifting of the restrictions. With most steel, cement and automobile operations suspended and FMCG operating at sum-optimal capacity, the fiscal boost needs to come sooner rather than later. The government has already provided a Rs.1.70 trillion stimulus while the RBI has infused liquidity to the tune of Rs.3.74 trillion. However, options may be limited as disinvestment may be tough with weak markets. Further tax cuts are ruled out and it remains to be seen how the government can accommodate more spending with the current fiscal situation. There could be a conscious decision to let the fiscal deficit spiral as a special case and also it could monetize the deficit.

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