A fiscal stimulus package may be on the cards again as the government looks at ways to prevent the present surge in Covid-19 cases and the ensuing restrictions imposed by the states from derailing the economic recovery.
After last year's lockdowns, which resulted in the country's GDP contracting by (-) 23.9 per cent, it was hoped that the economy will grow handsomely in FY22 to register a double digit growth.
For this to happen, the RBI has projected a Q1 FY22 GDP growth of 26.2 per cent. But the recent surge in the pandemic has again raised serious questions about the health of the economy.
There are some discussions within the government about the need, shape and timing of a fresh fiscal stimulus package. The idea is to see that the poor and small businesses do not suffer and their livelihood support is not disturbed, said an official source, on condition of anonymity.
The source said that any such package, if finalised, would come up later this month or next month.
The Union Finance Ministry has so far not indicated about any new stimulus to contain the disruptions caused by the fresh Covid-19 wave in the country.
Last year, the government and the RBI came up with a series of announcements to provide relief to the common man and businesses impacted by the Covid-induced lockdown.
Under its 'Aatmanirbhar Bharat' package and the Garib Kalyan Yojana, the government had announced packages worth over Rs 20 lakh crore.
While the economic situation is still much better than last year and the government has indicated against a complete lockdown this year, support measures could just look at the most vulnerable sections of the society and the industry.
Sources said that like last year, the package may include measures by the government as well as compliance relief offered by the Reserve Bank of India (RBI). Already, various ministries are providing inputs to the Centre.
The worry for the government this time round is also about inflation that has seen an increase in the last few months.
This actually means that people are already struggling with higher food prices while their income is dogged with uncertainty.
The RBI will also have to do a balancing act over growth aspirations and containing inflation.