Govt eyeing more steps to aid recovery

NEW DELHI: The government has begun preliminary work on the next set of measures that may be required to pull the economy out of a deeper contraction than initially expected, as recovery loses steam due to localised shutdowns, government officials said. This follows the Atmanirbhar Bharat Abhiyan announced in May to help India become self-reliant and revive the pandemic-hit economy. Prime Minister Narendra Modi — who was briefed by the finance ministry last week — the Prime Minister’s Economic Advisory Council and the Niti Aayog, among others, will take a final call on policies and their timing. Govt to Watch EconomyThis is because any additional stimulus will necessitate a decision on monetisation of the deficit by the Reserve Bank of India, said a government official. 77058259Measures to boost infrastructure creation and further reforms to unshackle the economy such as privatisation could be in focus. There is a big push for privatisation of Bharat Petroleum Corp Ltd (BPCL), the official added.While various policies have been discussed, the government is likely to watch the economy for some more time before taking further steps, another official said. It is still looking at the impact of measures already taken, as some sectors such as automobiles are recovering, the official added.There is a growing view within the government in support of capital expenditure to boost the economy, as this will have a multiplier effect. Assessments presented to the Prime Minister covered key economic parameters, sectoral performance, various measures taken so far and their impact on the ground, as also steps that may be needed. What other countries are doing on the economic front to combat the effects of Covid-19 was also highlighted.“Discussions are very preliminary — we are monitoring closely. Some sectors continue to show good recovery,” said one official.A number of steps under the Atmanirbhar Bharat Abhiyan — such as liberalisation of foreign direct investment (FDI) rules in defence and a policy for public sector enterprises — are yet to be operationalised, though work on both is at an advanced stage.India had imposed a nationwide lockdown in March to contain the Covid-19 outbreak. This was eased in phases through May to get business activities up and running. Although the nationwide curb was lifted June 1, giving the economy a boost, the rise in infections has meant that localised shutdowns have been imposed in various states, hampering the recovery. The presentations were made in the backdrop of a number of indicators such as e-way bills, power consumption and mobility indices slipping in July from their June levels. Rating agency ICRA expects the economy will shrink 9.5% in FY21, almost twice the 5% contraction it had estimated earlier.

from Economic Times https://ift.tt/2OEWTgD