Nirmala Sitharaman Press Conference LIVE Updates: Finance Minister's Address Shortly Amid Reports of New Stimulus

After several rounds of discussion the government has almost finalised the next stimulus package, the source said, adding that the size of the stimulus could be much lower than the earlier announced amount of Rs 20 lakh crore. The government may announce the reintroduction of the Pradhan Mantri Rojgar Protsahan Yojna in an expanded form, they said. Under this scheme government may give 10 percent subsidy on PF contribution for new employees and the employer, both.

Another source stated that the upcoming package may announce the Emergency credit line Scheme part-2. Under this scheme the government likely to provide collateral free credit. Similarly, some special incentives for specific sectors may be part of this package, the source added. 

This would be the government’s third stimulus package after the Covid-19 outbreak.

The government on Wednesday approved a Production-Linked Incentive (PLI) scheme for ten key sectors, including telecom, automobiles and pharmaceuticals, taking the total outlay for such incentives to nearly Rs 2 lakh crore over a five-year period. The scheme is meant to help encourage domestic manufacturing, reduce imports and generate employment as the government works to bolster economic growth. The financial outlay for the new scheme will be Rs 1,45,980 crore.

The Cabinet had also decided to extend the viability gap funding scheme to social infrastructure sectors. The scheme is currently available only for projects concerning economic infrastructure.

The PLI scheme, Sitharaman had said, would provide encouragement to the critical sunrise sectors by ensuring necessary support from the government in addition to creating jobs and linking India to global value chain.

An RBI official said Wednesday that India’s GDP is likely to contract by 8.6 per cent for the July-September period, which meant the country would enter into a recession for the first time in history in the first half of this fiscal with two successive quarters of negative growth due to the coronavirus pandemic.

Researchers have used the ‘nowcasting’ method to arrive at the estimates ahead of the official release of data and their views in an article in RBI’s monthly bulletin released on Wednesday do not constitute the central bank’s views.

The pandemic-induced lockdowns had led to a steep contraction of 23.9 per cent in the GDP for the April-June quarter as compared to the same period a year ago.

The RBI estimated that the economy would contract by 9.5 per cent for the full fiscal year. “India has entered a technical recession in the first half of 2020-21 for the first time in its history with Q2 2020-21 likely to record the second successive quarter of GDP contraction,” as per the article titled ‘Economic Activity Index’, authored by Pankaj Kumar of the Monetary Policy Department.