From the Rs 20 lakh crore economic package, the finance minister Nirmala Sitharaman announced measures worth Rs 11 lakh crore in five tranches over the past few days. According to Crisil research, all the measures reflect a fiscal outgo of only Rs 1 lakh crore, which is 9 per cent of Rs 11 lakh crore.
The report stated considering there are fiscal constraints, the government has undertaken measures that can magnify the impact of every rupee of the stimulus. “Hence, the liberal use of guarantees and tiered funding structures. This reflected in the actual committed fiscal outgo of Rs 1 lakh crore, translating to a meagre 9 per cent of the Rs 11 lakh crore of measures outlined over the five tranches.” The firm added that the bulk of this direct support would be “through the Pradhan Mantri Garib Kisan Yojana.”
The firm asserted, “While the government has not added much to its current year fiscal outgo – and thereby deficit –it will weigh on public debt next fiscal unless the economy revives.”
The report stated the government spend will be Rs 18,300 crore, Rs 6,700 crore, Rs 8,100 crore, Rs 4,000 crore, and Rs 72,500 crore for MSME, real estate, construction, Agriculture procurement and sales and Agri allied respectively.
Most of the structural reform by the government was announced in tranches 4 and 5, which is expected to bring about growth in the medium to long term. This was mainly through announcements related to sectors such as mining, aviation, urban infrastructure, power, and agriculture.
The rating agency said, “While most steps from the government are steps in the right direction, it is unlikely to stimulate demand/consumption given that the package is more focussed on supply-side reforms.”
The report highlighted the fact that there were no clear announcements for highly vulnerable sectors such as airlines, tourism and hotels. While the government announced additional lending for MSMEs in the space, it did not highlight anything to improve the sentiment of the workforce — both organised and unorganised.