New Delhi: Finance Minister Nirmala Sitharaman is set to announce more fiscal measures in the coming days, though the contours of those have not being disclosed, however, sources said infrastructure could be an area of action.
Continuing with her series of announcments since August, the FM has been keeping dates with sectoral stimulus but its not over yet, there are more to come, at least one in the near horizon, official sources said.
She announced a slew of steps in three series with the latest being a special window for real estate, export incentives, bank consolidation and sops for micro, small and medium enterprises (MSMEs) and the automobile sector.
Before that she had announced rollback of the enhanced surcharge imposed on foreign portfolio and domestic investors in Budget 2019-20. The oil spike has also fuelled fresh growth worries. Rise in crude oil prices could further aggravate India’s fiscal situation and make it more difficult for the government and the central bank to effectively combat a slowdown in economic growth.
With drone attacks on Saudi Aramco’s facilities causing the biggest ever disruption in oil suppliers, India is preparing to stem the impact of the price surge. The fear is with slowdown. India’s current account and fiscal deficits could worsen if oil prices remain at the elevated level.
The surge in oil prices comes at a time when GDP growth slumped to the slowest in more than six years at 5 per cent. An increase in inflation stoked by higher fuel prices will also leave less space for RBI to cut interest rates to combat the slowdown.
On the slowdown fight, So far the government has not come out with big public spending to reinvigorate growth and demand.
In Guwahati, Sitharaman had clearly said government will front-load capital spending this fiscal year in a bid to support economic growth and will come up with more measures to arrest the economic downturn. Front-loading, or spending the entire allocated amounts for various projects early in the financial year rather than waiting for the last quarter, is typically done to support growth.
“We shall be spending considerable amounts for infrastructure building. And for that, post the budgetary announcement, I went to the extent of saying some of the milestones in public expenditure in infrastructure can even be brought forward,” Sitharaman said.
She also indicated that more steps will be announced to boost growth saying “We recognized that consumption had to be given a boost. We shall be spending considerable amounts for infrastructure building.”
Sitharaman has reversed a tax increase on foreign portfolio investors, and announced steps to boost the automobile sector and deepen the bond market. Banks have been infused Rs 55,250 crore out of the announced Rs 70,000 crore to improve balance sheets and help finance new projects.
