Prime Minister Narendra Modi said on Tuesday that India would provide 20 trillion rupees ($266 billion) in fiscal and monetary measures to support an economy battered by a sweeping weeks-long lockdown to fight the novel coronavirus.
India has more than 70,000 cases among its 1.3 billion population and is set to surpass China, the origin of the outbreak, within a week. Modi said strict stay-at-home orders would be extended beyond May 17 with a new set of rules.
In an address to the nation, he said the package was equivalent to 10% of India’s gross domestic product, and was aimed at the multitudes out of work and the businesses reeling under the prolonged shutdown.
In March, the government said it was providing around 1.7 trillion rupees ($2.6 billion) in direct cash transfers and food security measures, mainly for the poor, but was widely accused of doing too little.
Modi said details of the new package, as well as reforms of land and labour markets, would be released within days.
“The package will also focus on land, labour, liquidity and laws. It will cater to various sections, including cottage industry, medium and small enterprises, labourers, middle class, industries, among others,” he said.
Economists said the new package included the March allocation as well as liquidity measures announced by the central bank worth $6.5 trillion rupees.
“Headline announcement looks positive. Would include around 6.5 trillion rupees already done by RBI (Reserve Bank of India) and the first package. So – additional is 13.5 trillion rupees,” said Sandip Sabharwal, a Mumbai-based fund manager.
“It doesn’t match the gross borrowing details of the government so we need to look at details. Headline number should, however, excite the markets near-term.”
Last week, India increased its borrowing programme for the year to 12 trillion rupees from 7.8 trillion to fund some of the expenses.
ECONOMY SLOWING, SPENDING RISING
Even before the pandemic, India’s growth was slowing and public finances were strained because of poor tax collection and higher spending.