17:50 GMT23 November 2020
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    The COVID-19 pandemic has taken a deep toll on the Indian economy, which contracted by 23.9 percent in April-June this year, compared with the same period in the previous year. Prime Minister Narendra Modi announced a $266 billion stimulus package in May this year to mitigate the pandemic's impact on the economy.

    The Indian Finance Ministry is likely to announce funding measures for infrastructure and sector-specific bailout packages to help the economy recover from the COVID-induced disruptions.

    A source in the Indian Ministry of Finance indicated that deliberations have taken place on a Development Finance Institution (DFI) and targeted bailouts of affected industries such as aviation, tourism, and hospitality, among others.

    “Both DFI and sector specific stimulus may be announced. The measures are likely to be announced ahead of Diwali”, said the source, adding that certain other measures such as an urban job guarantee scheme may also be considered.

    Diwali – the festival of lights – is to be celebrated on 14 November.

    On Wednesday, Department of Economic Affairs Secretary Tarun Bajaj had said that the government is working on additional stimulus measures.

    The Indian Finance Ministry is deliberating setting up a DFI to help raise funds for long-term infrastructure projects as the government is planning to invest $1.4 trillion in infrastructure over the next four years. It remains to be seen whether the institution will be fully owned by the government or it will be a public-private partnership with the corporate sector, with the government stake being limited to 49 percent.

    On sectors facing problems even as the economy is opening up, the source said civil aviation, transport, tourism, and hospitality are some of the areas which may benefit from the stimulus.

    A number of stimulus measures have been taken by the Indian government since the COVID-19 pandemic broke out in the country. The first intervention came immediately after the announcement of a national lockdown on 25 March, when Indian Finance Minister Nirmala Sitharaman announced a $26 billion relief package, which provided food grain entitlements to the poor who lost their livelihoods due to the pandemic. The food grain entitlement will continue until November.

    Next was a $266 billion stimulus package announced by Prime Minister Modi in May. On 12 October, the finance minister announced further measures worth $6.64 billion to stimulate demand in the economy.   

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    economic recession, economic stimulus, Economy, India
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