“Whatever measures the monetary authorities could take so far, have been taken. Now, it’s up to the fiscal authorities (government) to do the heavy lifting,” he said.

Economists on Tuesday suggested that the Centre acts as a financier to resource-starved states, clear dues owed to them fast and elevate spending to boost demand and reverse a slide in growth at the earliest to protect both lives and livelihood that are battered by the pandemic.

Pronab Sen, noted economist and former chief statistician, said much of the heavy lifting for reigniting growth impulses will have to be done through greater fiscal stimulus. “Whatever measures the monetary authorities could take so far, have been taken. Now, it’s up to the fiscal authorities (government) to do the heavy lifting,” he said.

Speaking at a webinar, organised by the CII and the Institute of Economic Growth, Abheek Barua, chief economist with HDFC Bank, favoured the idea of floating the Covid bonds. The amount so raised can be shared between the Centre and states under a formula, he added. This fund needs to be “ringfenced” and will be used in fighting the pandemic.

The government last month announced a Rs 21-lakh crore package, including for MSMEs, agriculture, horticulture and fisheries. The package includes collateral-free, extra working capital loans for MSMEs (up to 20%) with official guarantee, which was expected to benefit 45 lakh MSME units. Prime Minister Narendra Modi on Tuesday said the subsidised grain supply scheme will be extended by five months through November, which will cost the government Rs 90,000 crore more.

Various economists and analysts have predicted an up to 6.8% contraction in GDP growth in FY21, while they are divided over the possibility of a sharp recovery in FY22.

While the Rs 3 lakh-crore guaranteed and collateral-free loan scheme for MSMEs is a good idea, it will most likely help only the strong-footed ones and the vulnerable businesses among them may not really benefit from it, some of the economists said. Similarly, subsidised grains should be supplied to even those vulnerable sections that are without ration cards, they added.

Ajit Ranade, chief economist at Aditya Birla Group, rooted for heavy investment in healthcare and quick transfer of various tax and other dues to states. He also recommended that the government explore the UK-like furlough scheme.

Former CII president Naushad Forbes also emphasised on expeditious clearance of dues to industry. He also stressed that the Centre transfer taxes to states in advance, if possible, and address woes of even large companies in hard-hit sectors. This is because large companies usually source from MSMEs, and if they collapse, it will dent the entire supply chain. Also, the government must roll out big infrastructure projects to boost demand.