‘No silver bullets in stimulus package’

On the Rs 20.97 lakh crore package announced by the Finance Minister, brokerage houses in their research reports said that given the depressed demand conditions the fiscal activism will serve the cause of growth, jobs, price stability and macroeconomic stability better than fiscal conservatism.

They believe that the actual spending from the entire stimulus package will be below 1.5% of GDP. Further, they view that there was less cash stimulus but more about reforms.

Bernstein in its report said while the package started on important aspects but the need to announce measures that add up to this top down number, made the entire package aimless with several generic announcements which should ideally, have been a part of a normal agenda. It is a lost opportunity.

“The plan in our view, was a general economic agenda and lacked substantive decisions to support consumption, promote manufacturing and even the broader reforms lacked the spark while urban corporates were ignored. We believe that equity markets are likely to be less enthused with the package, as it is less likely to support the economy,’’ it added.

The analysts at Bank of America (BofA) and Nomura maintained their earlier GDP estimates suggesting a contraction of 0.1 per cent and 5 per cent, respectively, for FY21 even after the announcement of the Rs 20 lakh crore economic package.

"The package may fall short of mitigating the near-term challenges for some businesses, but it is better designed to improve India's medium-term growth potential and attract long-term risk capital," analysts at the Japanese brokerage Nomura said.

They also added that there are no "silver bullets" in the package.