Economic revival: Another round of stimulus measures likely, says Niti Aayog VC

Last month the government extended the free grain scheme by another five months through November, with a potential subsidy of another Rs 90,000 crore.

Niti Aayog vice-chairman Rajiv Kumar on Friday said that the Centre may announce more fiscal stimulus measures in the next three to four months to prop up demand in the economy. “There is a possibility of the government having another round of stimulus in the coming three to four months, if one finds there is a slack in demand, as a result of which capacity utilisation is not improving,” Kumar said in a public interaction on Twitter.

On Wednesday, chief economic adviser Krishnamurthy V Subramanian had said that the government is initiating more fiscal measures to reverse the sharp growth slide, which has been exacerbated by the Covid-19 pandemic.

Speaking at a virtual Ficci event, the CEA said economic uncertainties will substantially ease once a credible Covid-19 vaccine is rolled out in, say, about two months.

That is when consumers will likely start discretionary spending and investors will respond, he said, hinting at possible intervention around the time discretionary expenditure, battered by the pandemic, shows signs of a recovery.

Analysts say of the Rs 21-lakh-crore relief package, real fiscal intervention is only to the tune of Rs 1-1.1 lakh crore; the rest are mostly in the form of credit guarantee and liquidity-enhancing measures. Of course, last month the government extended the free grain scheme by another five months through November, with a potential subsidy of another Rs 90,000 crore.