Next round of stimulus package may be announced before Diwali

Reuters/Amit Dave

The much-awaited financial stimulus package may be announced before Diwali, or even tomorrow, or the day after, a top finance ministry source said.

It will be focussed mainly on employment generation and incentives for stressed sectors, sources told Moneycontrol.

According to the sources, after several rounds of discussion, the government has almost finalised the next stimulus package.

The package size could be much lower than the earlier announced stimulus package of 20 lakh crore rupees, the sources said.

As part of the package, the government may announce the reintroduction of the Pradhan Mantri Rojgar Protsahan Yojna in an expanded form. Under this scheme, the government may give a 10 percent subsidy on provident fund (PF) contribution for both new employees and employers.

Another source said the upcoming package may announce the Emergency Credit Line Scheme part-2. Under this scheme, the government is likely to provide collateral-free credit.

Similarly some special incentives for specific sectors may be part of this package,  the source added.

The economy has been in the doldrums for the past several months as the months-long coronavirus-induced lockdown severely crimped economic activity. Growth during the April-June quarter saw its sharpest drop since records began. However, following the easing of lockdown restrictions, activity has picked up somewhat though not to pre-covid levels, and industry and market watchers have been calling for more stimulus measures to boost growth.

The government has also been strapped for cash and has had to increase its borrowing for the current fiscal year to a whopping Rs 13 trillion to make up for the shortfall in revenue.

This will be the third stimulus package after the covid outbreak.