The central government is planning to announce another round of stimulus measures ahead of the festive season to create jobs and push demand as it looks to turn around India’s ailing economy, Moneycontrol reported.
India had seen its steepest ever contraction in April-June quarter as GDP contracted 23.9 per cent year-on-year, the worst among G-20 nations, leading to calls for the government to increase spending.
The government’s plans for the fresh stimulus measures may involve a bigger direct fiscal outlay compared to the previous two packages - the PM Garib Kalyan package and the Aatmanirbhar Bharat package.
It could include a Rs 35,000 crore urban jobs scheme, a massive infrastructure initiative with emphasis on 20-25 big projects which can be completed this year, and continuing focus on rural jobs, farm schemes, free food and cash transfers, Moneycontrol said.
The main focus of the scheme will be job creation, and it will be on the lines of the NREGS. Unlike NREGA, however, “it will not require legislative action,” the second official said, and added that a draft cabinet note was being prepared.
“The aim is to announce some measures before the festive season begins,” a top government official told Moneycontrol on condition of anonymity. India’s festive season begins traditionally with Dussehra/Durga Puja. This year, the festivities will start from the third week of October.
Private consumer spending, which contributes more than half the Indian economy, got chipped by 27 per cent, and the government hopes it will pick up during the festivals. The October-December quarter is the most crucial one for customer facing companies in India, including four and two-wheeler manufacturers and makers of consumer appliances.
The centre’s focus on the rural economy, spelt out under the previous two Covid economic packages, is set to continue as well. The free foodgrain and free cash transfer schemes are likely to be extended.
Earlier, the government wanted to keep its purse strings tight till a vaccine was ready, but the drastic fall in GDP numbers in the first quarter and another fall in economic activity in after July seem to have convinced the government on the need to spend.
“The right time to spend is now. The situation is still uncertain and a vaccine may not be available till the first quarter of the next year. The centre’s biggest economic focus is job creation,” said the second official.