Finance Minister Nirmala Sitharaman said the choice of another fiscal stimulus for the present fiscal year remains open, a top aide said the ministry is functioning on such a package.“The minister of finance , in her interaction each day ago, has mentioned that (about increasing government expenditure). She has told us to figure thereon , and that we are literally performing on that," economic affairs secretary Tarun Bajaj said on Wednesday.
“Based on the varied suggestions that we've received from all of you (industry leaders), we'll be performing on it and can attempt to do something on this front also in order that the push to the economy, which is extremely much needed in these stressful times, is provided," he said at a webinar organized by industry lobby Confederation of Indian Industry, or CII.Speaking at the virtual launch of 15th Finance Commission chairman N.K. Singh’s autobiography, Sitharaman on Monday said she has not closed the choice for an additional stimulus package.
While the finance ministry has announced two stimulus packages totalling about 1.5% of GDP—the Atmanirbhar Bharat Yojana in May and therefore the latest one last week—critics have acknowledged the government’s cautious fiscal response to the coronavirus-induced recession compared to India’s peers and other large countries.
On 12 October, the minister of finance announced a stimulus package worth ₹46,675 crore, including incentives for central government employees to spend more on durables during the festive season and better cost for both the Centre and states. Rating agency Moody’s last week said the measures worth 0.2% of GDP will provide only limited support to growth and highlight the “very weak fiscal position" of the govt .
Bajaj said while the govt has begun the budget-making exercise for subsequent fiscal, it's still watching the additional requirement for expenditure for various sectors. “We have mentioned it to the departments to push such cost that features a multiplier effect. If there's extra money needed, we might be providing that in our revised estimates. The challenge obviously now's to make sure that the departments that are liable for infra spend actually spend this money," Bajaj said.
Madan Sabnavis, chief economist at Care Ratings, said any stimulus from the govt hereon is more likely to be within the realm of specific policies concerning sectors instead of a measure which affects revenue or expenditure. “As we are seven months through the year, and preparations are on for subsequent year’s budget, it's likely that any measure are going to be fiscally neutral," he added.The finance ministry began the budget-making process for FY22 on 16 October with pre-budget meetings with ministries and departments. this may be the third budget of minister of finance Nirmala Sitharaman and eighth of the Narendra Modi government.