A Barclays report suggests that in the five tranches of announcements made since May 13, the actual fiscal impact is to the tune of Rs 1.5 lakh crore including the largest single additional cost of Rs 40,000 crore due to higher allocation to MNREGS.
The additional fiscal impact of these announcements could be minuscule as a large part of the stimulus package included liquidity measures which will not have any immediate bearing on the government’s finances.
The actual additional cost of Rs 20.97 lakh crore stimulus package to the government could be just Rs 2-2.5 lakh crore, or 1-1.2{b1ee4ac4d8d7b8e1af61a560a11ca52574b8103b547ccac8037ce0cdf9e7ba58} of GDP. The additional fiscal impact of these announcements could be minuscule as a large part of the stimulus package included liquidity measures, announced by RBI since February, which will not have any immediate bearing on the government’s finances. Besides, the cost of some of the announcements was already budgeted for.
Dr DK Srivastava, Chief Policy Advisor, EY India, says, “Only about 10{b1ee4ac4d8d7b8e1af61a560a11ca52574b8103b547ccac8037ce0cdf9e7ba58} or Rs 2.1 lakh crore of this stimulus can be traced as direct additional budgetary cost to the central exchequer. Nearly 5{b1ee4ac4d8d7b8e1af61a560a11ca52574b8103b547ccac8037ce0cdf9e7ba58} of the stimulus relates to already budgeted expenditures.”
A Barclays report suggests that in the five tranches of announcements made since May 13, the actual fiscal impact is to the tune of Rs 1.5 lakh crore including the largest single additional cost of Rs 40,000 crore due to higher allocation to MNREGS.
If we include Rs 70,000 crore additional cost incurred due to Rs 1.7 lakh crore PM Garib Kalyan Package announced in the last week of March, the total additional cost to the govt turns out to be Rs 2.2 lakh crore.
Apart from the additional MNREGS allocation of Rs 40,000 crore, the other major expenditures include Rs 20,000 crore allocation through Pradhan Mantri Matsya Sampada Yojana, Rs 10,000 crore Fund of Funds corpus for MSMEs, Rs 10,000 crore for micro food enterprises, Rs 8,100 crore Viability Gap Funding for infrastructure, Rs 6,000 cr Compensatory Afforestation Fund Management and Planning Authority fund for tribals and adivasis, etc.
An economist from a mutual fund house said the near-term fiscal expenditure due to these announcements could be Rs 2.1 lakh crore, or 1{b1ee4ac4d8d7b8e1af61a560a11ca52574b8103b547ccac8037ce0cdf9e7ba58} of the GDP.
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