Experts welcome FM's fourth tranche of stimulus announcements, say immediate impact may be limited

Experts have welcomed the fourth set of announcements made by FM Nirmala Sitharaman on May 16 whereby she introduced several structural industrial reforms in an effort to re-ignite the economic engine as the country battles COVID-19.

The coal sector gets a boost as the private sector can now bid at the auctions for 50 blocks, says CARE Ratings on the fourth tranche of the COVID-19 relief package announced by Finance Minister Nirmala Sitharaman.

“Social infra like hospitals to get VGF of 30 percent with the government giving Rs 8100 crore. This is good, but will work over a period of time,” said the company in a statement issued following the finance minister’s press conference on May 16.

Dhiraj Relli, MD and CEO, HDFC Securities said, the fourth part of the stimulus announcement is focused on “New Horizons of growth.”

“This announcement covers a wide spectrum of areas. These are spread over multiple years and hence their immediate impact may again be limited. Fiscal impact also seems very small for the current fiscal. Some of these may require legislative approval, states’ cooperation and signal from judiciary about being quick in decision making and being fair to bidders/general businessmen,” said Relli.

Also, a lot of these measures need not have waited for COVID-19, said Relli in the statement.

Indian Chamber of Commerce (ICC) lauded the structural reforms announced by the Government of India in the fourth tranche of the stimulus in key sectors including power, coal, defence and aviation.

In a statement issued after the press conference, ICC said that the government also promised to provide a predictable policy and regulatory environment to private players, which would provide competitive edge to Indian Companies and also attract Foreign Investors to India.

Elias George, Partner and National Head, Infrastructure, Government and Healthcare, KPMG in India, said, “Today’s announcement serves the two cardinal purposes of enabling  foreign investment in defence production while also ensuring greater self-reliance in this sector.”

The enhancement of the FDI limit in defence manufacturing from 49 percent to 74 percent, is indeed a landmark move that will hopefully enhance India’s attractiveness as a defence manufacturing nation, said the KPMG statement.

Date: May 19