Conditional fiscal stimulus at minimal 0.2% of GDP: SBI Ecowrap

New Delhi, Oct 13 : The latest stimulus measures announced by the Centre will lead to a maximum additional cash outgo of Rs 40,000 crore, which is around 0.21 per cent of the GDP during the current fiscal, an SBI Ecowrap report estimated on Tuesday.

In comparison, the last stimulus package had a cash outgo of Rs 2 lakh core or around 1 per cent of the GDP.

The measures introduced under the Rs 73,000 crore package provides for ‘LTC Cash Voucher Scheme’, ‘Festive Advance’ and loans to state governments to spend as capital expenditure.

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As per the report, the Centre has proposed a special interest free 50-year loan to the states for capital expenditure of Rs 12,000 crore to be spent till March 2021.

Out of the total, Rs 10,000 crore will be provided to all the states and Rs 2,000 crore to states which meet at least three out of four reforms given in the ‘Aatmanirbhar’ fiscal deficit package.

“Though we welcome this step, we believe that Rs 12,000 crore is minimal given the fact that this amount is only 1.6 per cent of the FY21 budget estimates of capital expenditure of select 18 states.

“This number will reduce further if we add the capex projections of all the other states. Regarding the extra Rs 2,000 crore, we believe that only a few states will be eligible for this amount. We believe only around 10-15 per cent employees would use the LTC scheme,” the report said.

In case of festival advance, the report said that assuming that it is taken in November and since it is to be returned in maximum of 10 instalments, four instalments will be paid back in this fiscal, thus leaving a burden of Rs 2,400 crore to the exchequer.

“Further capital expenditure will lead to Rs 25,000 crore cash outgo for the Centre’s budget allocation and Rs 12,000 crore loan for states.

“Taking all these into account, Rs 40,000 crore is the maximum additional cash outgo of the Centre during the current fiscal, which is around 0.21 per cent of GDP… Let us hope these new measures are not a case of too little too late,” the report said.

Disclaimer: This story is auto-generated from IANS service.

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