The direct fiscal impact of all the packages announced by the Finance Ministry comes to only around ₹2 lakh crore or 1 per cent of GDP, according to a report by the State Bank Of India
"The measures announced have been a mix of short term and long term, with focus on building the capabilities for the small players in the economy as well as paving the way for structural changes in certain sectors. However, the package does not do much to boost consumption in short term and that could act as a drag on growth," SBI said in its report Ecowrap.
On the positive side, several sectors like Coal, Power, Aviation, Social Infrastructure, Space and Atomic Energy have been singled out for reforms that could have significant long term potential. "The agricultural reforms deserve special mention. For example, the Centre also proposes to enact a Central Law to let farmers transport their produce across state borders and sell to whoever they want, not just APMC licencees. If competitive supply chains emerge, this could shorten the farm-to-fork path, as its called, and assure farmers a larger share of the consumer spend on food," SBI said.
It estimated that the revenue loss for the Centre after taking into account of gains from excise duty hike and DA freeze comes to around ₹6.53 lakh crore.
However, the Government has announced additional borrowing of ₹4.20 lakh crore for FY21. "As per our estimates, a total of ₹4.36 lakh crore is still the uncovered loss for the Centre even after its additional borrowing. Interestingly, this is nearly equivalent to Budgeted Capital Expenditure (CE) of the Centre, implying almost negligible growth in CE in FY21." it said
" We are thus less hopeful of recovery in current fiscal and our GDP numbers could now have a downward bias from current stress estimate of –4.7% in FY2," it added.
The report said the RBI needs to give operational flexibility to banks for a comprehensive restructuring of the existing loans and also a reclassification of 90-day norm.