India Unveils INR1.7tr Stimulus Plan to Ease Virus Pain

  • India announced a INR1.7tr spending plan as part of measures to ease the economic impact of coronavirus pandemic on the poor in the world’s most populated nation after China.
  • The plan will include cash transfers as well as steps on food security, Finance Minister Nirmala Sitharaman said in New Delhi Thursday. The package will benefit migrant workers, she said.
  • Cash support listed by the finance minister include payments to farmers under an existing income support program. Free cooking gas to the poor for three months, state-sponsored contributions to retirement funds for the same duration and insurance cover of 5 million rupees to medical workers are also part of the plan, she said.
  • The government hinted that more measures are on the cards. “Today’s measures are very clearly aimed at reaching out to the poor,” she said. “I will gradually address if there’s more to attend to.”
  • Sitharaman didn’t respond to questions from reporters on how the government will finance the measures or if they are from previously budgeted programs. She didn’t also say if the government would need to borrow to finance the proposals.
  • The government targets a budget shortfall of 3.8% of gross domestic product in FY20 and 3.5% in the year starting 1 Apr 20 (i.e. FY21). “At this stage I’m more concerned about reaching out to those who need the help,” Sitharaman said.
  • India’s government earlier allowed companies to divert their philanthropy spending to support the virus fight, corralling more resources, and eased regulatory rules such as extending deadlines for filing tax returns and waiving penalty on companies for not holding board meetings for a certain period.
  • The central bank, which has been injecting dollar and rupee liquidity, is set to announce its interest rate decision next week.

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