Prime Minister Narendra Modi on Saturday held a crucial meeting with home minister Amit Shah and finance minister Nirmala Sitharaman to firm up strategies for the financial sector in the aftermath of the Covid-19 outbreak, amid mounting expectations of a stimulus package following the extension of the lockdown. The meeting also dwelt upon the need to usher in long-term structural reforms in infrastructure, credit offtake and corporate governance.
In a late night statement on Saturday, the Prime Minister’s Office (PMO) said he also discussed “strategies and interventions to support MSMEs and farmers, enhance liquidity and strengthen credit flows”. “PM also discussed ways and means to ensure financial stability in the wake of COVID-19 and measures taken to enable businesses to recover quickly from the impacts,” according to the statement.
Modi pointed out the need to generate gainful employment opportunities by helping businesses overcome difficulties. He stressed the need to expedite work on new infrastructure projects to make up for the time lost due to the lockdown. He wants the projects taken up under the National Infrastructure Pipeline (NIP) be reviewed at the highest level frequently so as to avoid time delays and enable job creation.
A government task force on April 29 firmed up a road map for capital investments of Rs 111 lakh crore in infrastructure over six years through FY25, pledging 71% of the expenditure for energy, roads, urban development and railways, and envisaging a key role for private investors.
The government on March 26 last announced a Rs 1.7-lakh-crore relief package for the poor and the vulnerable. However, a package to prop up the economy is yet to be extended.
Official sources earlier indicated that the total fiscal intervention could be to the tune of 3-4% of GDP (or Rs 6-8 lakh crore). However, the government will come out with several rounds of measures to respond to the evolving situation, instead of declaring one big-bang package. The NITI Aayog has projected the need for an even higher fiscal stimulus of Rs 10 lakh crore.
The Prime Minister has already held a series of meetings over the past week on sectors – including MSME, agriculture, aviation, power, coal, mining, defence and aerospace – with the focus on wooing foreign investments and tiding over the Covid-19 outbreak.