Over the last few weeks, representatives of the Union Finance Minister Nirmala Sitharaman have said that the Centre is open to come out with a stimulus package to boost the economy. (Representative Image: AP)
Amid the threat of a possible third wave of COVID-19, there has been a growing chorus for a fiscal stimulus to assist the economy still recovering from the impact of second-wave and subsequent restrictions imposed by states.
Over the last few weeks, representatives of the Union Finance Minister Nirmala Sitharaman have said that the Centre is open to come out with a stimulus package to boost the economy.
Is the government working on a COVID-19 relief package? Here's everything we know so far
As per a report published in The Economic Times, the Centre is preparing an Emergency COVID Response Preparedness (ECRP-2) package of over Rs 20,000 crore.
The Health and Finance Ministry is working to fine-tune the package, and it will be announced after a nod from the cabinet, the report said, quoting an official in the know.
Moneycontrol could not independently verify the claim.
The package will focus on augmenting dedicated COVID-19 treatment facilities, including ramping up of hospital beds, strengthening procurement of essential medical equipment and drugs, bolstering the national and the state health infrastructure, and setting up more laboratories and testing centres, it said.
Sources also told CNBC TV18 that the economic relief package is under consideration. "The announcement is likely to be made by June-July. The package may include an increased ECLGS limit of 4.5 lakh crore among other measures," people in know said.
Further, the scheme may also promote health infra in tier 2 cities. "Cabinet nod for up to 31,000 crore government guarantee for ‘bad bank’ structure also in process," sources told CNBC TV18.
On June 24, Principal Economic Advisor to the Finance Ministry, Sanjeev Sanyal said that the Centre would closely monitor COVID-19 infection data for six weeks to decide on economic intervention.
“We are dealing with uncertainty. The third wave may happen, but we do not know how it will unfold. We need to take some steps against the third wave as a policymaker, and we will carry monetary and fiscal interventions if required," Sanyal said.
He further said that the Centre would "carefully watch the high-frequency data for six weeks and monitor the testing rather than prejudge how it will behave".
Sanyal also said that fresh interventions could be targeted at sectors based on actual situations rather than generalised ones.
Earlier, Chief Economic Advisor (CEA) KV Subramanian also said that government was open to coming out with more measures to boost the economy which has been hit by the second wave of the coronavirus pandemic.
“Like last year, we do remain very open to coming up with more measures as well...but I think it is really important to take into account the big differences between last year and this year when we talk about a stimulus,” he told PTI in an interview.
Elaborating, the CEA said that, unlike the previous budget which had been framed before the pandemic, the 2021 budget was presented amid the pandemic and had already incorporated significant fiscal expansion.