Future actions to stimulate economy will depend on how coronavirus crisis pans out: FM

PTI New Delhi | Updated on May 23, 2020 Published on May 23, 2020

A file photo of Finance Minister Nirmala Sitharaman   -  PTI

A day after the RBI projected economic contraction in 2020-21, Finance Minister Nirmala Sitharaman on Saturday said that future fiscal policy actions to stimulate the economy will depend on how Covid-19 pandemic pans out.

The government has already announced a ₹20.97 lakh crore economic package, which includes Reserve Bank’s ₹8.01 lakh crore worth of liquidity measures till May 17.

Sitharaman said making a “realistic assessment” of economic growth would be difficult at this point of time as there is no clarity on when the pandemic would retreat.

“I’m not closing the door at all. I want to keep getting inputs from industry, implement what we have announced, and depending on how things pan out, we have to respond accordingly. We are only two-month old in this year, we have 10 months to go,” Sitharaman said in a conversation with BJP leader Nalin Kohli.

The Reserve Bank on Friday had said the impact of Covid-19 is more severe than anticipated, and the GDP growth during 2020-21 is likely to remain in the negative territory. It projected some pick-up in growth impulses from second half (October-March) of 2020-21 onwards.

Economic packages to fight Covid impact

Last week, the Finance Minister had announced an economic packages five tranches, which included a ₹3.70 lakh crore support for MSMEs, ₹75,000 crore for NBFCs and ₹90,000 crore for power distribution companies, free foodgrains to migrant workers, increased allocation for MGNREGA scheme, tax relief to certain sections and ₹15,000 crore allocated to the healthcare sector to deal with the pandemic.


The package was done in consultation with economists, academicians, ex-bankers, ex-finance ministry officials and industry, Sitharaman said, adding the idea was to make available more liquidity in the economy and revive demand.

“The package was designed keeping in mind that we are facing a situation which is exceptional and therefore whether the contraction is going to be this much or that much, we didn’t have the luxury of data to guess-estimating them. However, the spirit of that thought has been kept in mind that we have to now look at complete contraction and if we have to stimulate the economy keeping that in mind what is that we have to do,” she said.

Sitharaman said the approach has been to go through this route of stimulating the economy through companies, institutions, enterprises and businesses all getting assistance by banks or formulations through which businesses restart.

Kick starting the economy

“I’m sure the Indian entrepreneurs are also going to come out after they test the waters post the lockdown...We have come with measures which will get more liquidity in the economy, if there is more liquidity in economy people will get money in their hands and that will kick-start economy, bring more demand, she said.

Sitharaman further said that the government is working to further speed up FDI clearances by administrative departments, providing policy certainty and easing compliance burden for companies.

Covid-19, the disease caused by coronavirus, has claimed 3,720 lives in India while the number of infected stood at over 1.25 lakh.

Published on May 23, 2020

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.