India has announced a 20 trillion rupees ($260B) stimulus package to rescue businesses and soften the devastating blow from coronavirus on workers and economy. The new package will counter the devastating effects of CORONAVIRUS that threaten to bring the world’s third-largest economy to its knees.
Unveiling the fiscal stimulus, PM Narendra Modi said the ‘MADE IN INDIA’ strategy focuses on, “growing a new economy, creating a state-of-the-art infrastructure, setting up a technology-based delivery system, leveraging the young demography and by exploiting domestic demand.” The Reserve bank of India is spearheading the monetary easing measures.
India has been easing the lockdown measures currently in the third phase allowing limited reopening of construction sites and private offices. Further reopening adjustments are expected on Monday 18 May taking the zone classification criteria which is likely to see the opening of economic activities such as manufacturing.
The lockdown has left firms on the brink of bankruptcy due to drastic fall in revenue and cash flow with a contraction in the economy leading to pay cuts and retrenchments.
In it’s World Economic Outlook April 2020, the IMF predicts that India’s economy will grow by 1.9 per cent in 2020 down from 4.2 per cent witnessed in 2019. This will be a -3.9 contraction from the 5.8 per cent growth projected in January this year.
Under the scheme, India will revise the definition of MSMEs to allow MSMEs to expand rather than lose benefits. New plants will enjoy tax breaks coupled with incentives fro overseas companies in efforts geared towards luring foreign investors into India.
The package will boost investor confidence in India’s ability to deal with havoc caused by COVID19 as it is worth about 10 per cent of India’s GDP.
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