India Economy - Fiscal Cost Of New Stimulus Measures Likely To Be 0.3% Of GDP: ICICI Securities
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ICICI Securities Report
On June 28, 2021, the Finance Minister Nirmala Sitharaman announced a fresh round of stimulus measures to support the economy after the second wave of Covid-19.
The measures consist of three pillars: ‘economic relief’, ‘health’ and ‘impetus to growth and employment’.
While the announced size of the package was ~Rs 6.3 trillion (or ~2.8% of nominal gross domestic product in FY22), the actual fiscal outgo in FY22 is likely to be ~Rs 684 billion (~0.3% of GDP).
Our analysis of the measures shows that ‘economic relief’, ‘health’, and ‘impetus to growth and employment’ pillars account for 60%, 2% and 38% of the total announcements.
However, in terms of fiscal outgo, they account for 0%, 22% and 78% respectively.
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