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100 days and GDP shrink: Government works on a fresh stimulus -Aanchal Magazine and P Vaidyanathan Iyer

-The Indian Express

In mid-May, Sitharaman had announced five tranches of the AtmaNirbhar package, adding up to an economic package of Rs 20 lakh crore.

AFTER MORE THAN 100 days since Finance Minister Nirmala Sitharaman announced an economic package, six weeks after a series of meetings at the highest level underlined the need for a stimulus and official estimates indicating the worst-ever first quarter GDP contraction of 23.9 per cent, the government has finally identified the “non-salaried middle class and small businesses” as the target audience for a second round of stimulus.

In mid-May, Sitharaman had announced five tranches of the AtmaNirbhar package, adding up to an economic package of Rs 20 lakh crore. Much of it was liquidity support, with extra fiscal outgo by the Central government just a little over 1 per cent of GDP. While April-June GDP was expected to shrink, there are clear signals the second quarter, too, will contract, with July and August not showing any promise of big recovery.

With a more clearer picture now available, the government seems to have zeroed in on who needs financial support the most but is still debating its timing and mode of delivery. “This round of fiscal stimulus will be more for the group which is not completely poor and not rich. This in-between, the non-salaried middle class, it is the most affected. The timing of the rollout is crucial in getting the maximum benefit,” a senior government official told The Indian Express.

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