Stimulus package news: Government unlikely to opt for traditional stimulus, to focus on specific sectors | India Business News – Times of India

NEW DELHI: The government is unlikely to opt for a traditional stimulus to boost economic activity and will instead focus on specific sectors through schemes such as production-linked incentives, which it feels deliver better bang for the buck as it seeks to prioritise expenditure, especially due to higher-than-budgeted defence spending.
While Prime Minister Narendra Modi has held consultations with experts and officials on a possible stimulus, the move seems to have been deferred as the government felt fund-infusion would not have had the desired impact as economic activity had just resumed after the lockdown.
Demands for a stimulus have once again emerged but officials said the government is in no mood to hand out doles, given that a large part of the transfers made under the PM Garib Kalyan Yojana have been lying idle in the Jan Dhan bank accounts. There is a chariness among individuals and this is reflecting in higher deposits.

The requirement for measures like cash transfers has also come down as factories have restarted and many of them are facing shortage of manpower. The more encouraging GST collections for August are being seen as signs of better results in manufacturing, even while discounting for bunched up filing. The figures could indicate that the working capital support offered might be working. Besides, officials have argued that several steps have already been taken to deal with the immediate crisis in the wake of the lockdown.
One of the key proposals made during the presentations to the PM was on speeding up infrastructure spending to create demand for sectors. Officials said, several initiatives have already been taken by ministries such as railways, which has linkage with reviving demand for steel and other key inputs.
At the same time, officials said, extending schemes like production-linked incentives beyond mobile handset manufacturing and pharma to sectors such as lithium ion batteries and semi-conductors will not just support industries and create jobs but will also help reduce dependence on imports in strategic areas. A cabinet note for extending such incentives to other sectors has already been circulated, sources said.
The strategy is also necessitated by the need to channelise limited resources better at a time when revenue — both tax, non-tax — and disinvestment receipts will be lower than originally anticipated. At the same time, there is a need to focus on healthcare and defence in view of the tension along the Ladakh border.