Wednesday was a big day for Indian stock market as PM Modi announced Rs. 20 trillion economic stimulus package, it accounts for 10% of India’s GDP and is 2/3rd the size of budget announced in Feb’20. Government intent seems to be positive here, the package is expected to provide direct support to Micro, small and medium enterprises (MSMEs), Infra investment, support for credit guarantee program and payout of unpaid dues by government.
The support from this package will help mitigation of industrial dislocation and will support various MSMEs. These are some of the necessary steps to be taken for revival of economy and yes this will increase the fiscal deficit and have to be accounted for, the economists have forecasted a fiscal deficit of 7% of GDP for FY’21.
Further, FM Nirmala sitharaman to describe and announce the details of economic package at 4PM today, may be package is not disclosed in one go but in stages. The economic package has been designed to keep in mind various segments of the society like the small-scale industry, MSMEs, labourers, farmers, middle segment Taxpayers and industry in a whole.
Apart from relief measures announced by the Reserve Bank of India (RBI), the finance ministry had last month announced a ₹1.74 lakh crore package to provide benefits to the poor, including cash transfers, ₹50 lakh insurance cover and steps to ensure food security.
The Announcement is treated to be positive for Indian stock markets.