Govt to un­veil 1.5L cr stim­u­lus pack­age to tackle virus pan­demic

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NEW DELHI: In­dia is likely to agree on an eco­nomic stim­u­lus pack­age of more than 1.5 tril­lion ru­pees ($19.6 bil­lion) to fight a down­turn in the coun­try that is cur­rently locked down to stem the spread of coro­n­avirus, two sources fa­mil­iar with the mat­ter said.

The govern­ment has not yet fi­nalised the pack­age and dis­cus­sions are on­go­ing be­tween Prime Min­is­ter Naren­dra Modi’s office, the Fi­nance Min­istry, and Re­serve Bank of In­dia (RBI), said both the sources, who asked not to be named as the mat­ter was still un­der dis­cus­sion. One of the sources, a se­nior govern­ment of­fi­cial, said the stim­u­lus plan could be as large as 2.3 tril­lion ru­pees, but fi­nal num­bers were still in dis­cus­sion.

The pack­age, which could be an­nounced by the end of the week, will be used to put money di­rectly into the ac­counts of more than 100 mil­lion poor and to sup­port busi­nesses hit the hard­est by the lock­down, the sources said. In­dia woke up on Wed­nes­day to a sweep­ing lock­down of its 1.3 bil­lion peo­ple, one of the world’s most am­bi­tious ef­forts to fight the coro­n­avirus. In­dia has iden­ti­fied 606 con­firmed cases of the dis­ease, which has so far killed nine peo­ple in the South Asian na­tion. Modi an­nounced the three-week shut­down in a late evening speech on Tuesday.

The govern­ment will also in­crease its bor­row­ing plan for the fis­cal year 2020/21, which starts from April 1, from the cur­rent planned gross bor­row­ing of 7.8 tril­lion ru­pees, both sources said. The sources added that the govern­ment had asked the cen­tral bank to buy some of the govern­ment se­cu­ri­ties be­ing is­sued, a move not un­der­taken by the In­dian cen­tral bank in decades, due to fears of in­fla­tion spik­ing. “The RBI will have to buy bonds like other cen­tral banks in the world,” the first of­fi­cial said. The sec­ond of­fi­cial added the govern­ment could also use the cen­tral bank’s ways-and-means fa­cil­ity - an over­draft fa­cil­ity the RBI of­fers to the state - if it faces a cash crunch.

The Fi­nance Min­istry de­clined to com­ment on the plan and the RBI did not im­me­di­ately re­spond to an e-mail re­quest­ing com­ment.

PM Modi chairs a cabi­net meet­ing as min­is­ters main­tain so­cial dis­tanc­ing in the wake of coro­n­avirus pan­demic

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