A matter of relief: On economic stimulus bundle

With the announcement of the last tranche of Atmanirbhar Bharat Abhiyan, the COVID-19 relief package, a pattern to the government’s technique shows up. And that is to provide a strong supply-side push by enhancing schedule of capital on simple terms, keep income and wage support plans to the minimum, empower constituencies varying from farmers and employees to services, and finally, the most important, keep the damage to the fisc as low as possible. The fiscal effect of the20- lakh crore bundle is estimated by financial experts at in between 2-3%of GDP and that includes drawals from provisions currently made in the Budget plan for this fiscal. The pillar on which the plan rests is liquidity support so that companies can crank up once again and set the economic cycle back in movement. The option of a demand-side stimulus through a turn to deficit funding appears to be scheduled for a future date if the infection does not decrease or a second wave starts triggering another lockdown. The problem with this method is that there is a desperate requirement for demand stimulus now. A strategy to drive usage by, say, suspending GST for a couple of months or at least cutting rates temporarily, combined with a liquidity increase may have worked much better under dominating conditions. The Centre’s issue is that its earnings are a fraction of what it would have remained in a regular scenario however even provided this handicap, a financial stimulus coul