Economists pitch for 3 lakh crore package

Mumbai: Economists at SBI on Wednesday said a bulk of the Rs 1.75 lakh crore coronavirus aid package announced by the includes budgeted elements and pitched for a Rs 3 lakh crore top-up to help the economy tide over the COVID-19-related challenges.

Only Rs 73,000 crore of the Rs 1.75 lakh crore package announced by Finance Minister Nirmala Sitharaman last month is fresh money as the rest was already budgeted for, the economists said, adding a 'large fiscal package' for affected industries is necessary at this point. The already sagging economic growth is expected to go down further due to the COVID-19 pandemic, which has led to a three-week lockdown across the country starting March 25. Some analysts believe GDP growth will come at 2 per cent for FY21.

"Given labour and capital income loss of around Rs 3.60 lakh crore, the minimum subsistence fiscal package must be scaled up by Rs 3 lakh crore, over and above the incremental Rs 73,000 crore that was unleashed in the first phase," an SBI economist said in a note. The note said 98 per cent of the banking system's outstanding credit is in the 284 districts of the country affected by the COVID-19 and asked for needful attention to be given to the banking system.

Joining other watchers, the economists at the country's largest lender also called for some relief to the troubled NBFCs sector, which has been excluded from the three-month moratorium on loan repayments to financial institutions, and warned that if things deteriorate there will be an erosion of capital for such entities.