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Too Little Too Late: Stimulus likely to give marginal boost

“The impact of the schemes intended to spur consumer and capital spending may turn out to be fairly modest,” Aditi Nayar, Principal Economist said.

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Economy

New Delhi, Oct 13 : Modest funding of Centre’s latest demand boosting measures is likely to give a marginal boost to the economy, industry watchers contend.

Accordingly, many have termed these measures as ‘too little too less’ to pull the economy out of the Covid-induced downturn.

These measures introduced under the Rs 73,000 crore package provides for ‘LTC Cash Voucher Scheme’, ‘Festive Advance’ and loans to state governments to spend as capital expenditure.

“The latest measures are meant to encourage spending without fiscal cost to the exchequer. But the schemes have been designed in a way that they might not have much of an impact on boosting the aggregate demand. Attaching strings to the schemes mean they will remain a non-starter,” Sunil Kumar Sinha, Principal Economist, India Ratings and Research told IANS.

“The announced LTC scheme and festive advance is putting money in the hands of risk-averse section which has greater propensity to save. Plus the money allocated to states for undertaking capex is too small and unlikely a ccelerate their capex spending. At best it may help states clear their outstanding payments to vendors.”

According to Suman Chowdhury, Chief Analytical Officer, Acuite Ratings & Research: “Given the projected consolidated fiscal deficit of around 12% of the central and the state governments taken together, we believe there are constraints in providing a large fiscal stimulus at this juncture.”

“However, the government is making an effort to release some additional funds which will ensure moderately higher private consumption such as the new festival schemes for government employees and also capital expenditure by both the states and the central government.”

On the LTC Cash Voucher Scheme’, experts described the requirement to buy goods or services worth 3 times the fare and one time the leave encashment before March 31, 2021 as a big turn-off.

Besides, the amount must be spent on goods attracting GST on 12 per cent or more from a GST registered vendor through digital mode and GST invoice will b e required to be produced.

The LTC scheme provides central government employees allowance to travel a “once anywhere in India and once to hometown or twice for hometown visit” in a block of four years.

Air or rail fare, as per pay scale or entitlement, is reimbursed and in addition leave encashment of 10 days (pay and dearness allowance) is paid.

Similarly, the amount earmarked under ‘Festive Advance’ is likely time be saved rather than spent.

Notably, central government employees number just about 47 lakh or only 8.5 p er cent of organised sector workforce.

On the other hand, in April, the government froze dearness allowance hike fo r central government employees till July 2021 this could also keep demand muted.

“The impact of the schemes intended to spur consumer and capital spending may turn out to be fairly modest,” Aditi Nayar, Principal Economist said.

“We anticipate that the LTC and festival advance schemes will result in a temporary boost to consumer sentiment and economic activity, with a sharper pick up in festive season sales that would subsequently fizzle out.”

Furthermore, an additional capital expenditure of Rs 25,000 crore by the Centre was announced in addition to providing long term loans to state governments.

“The relatively small magnitude of the long-term loans to be provided by the GoI to the states, is unlikely to provide any meaningful boost to capex in FY2021,” Nayar said.

Additionally, Madhavi Arora, Lead Economist, FX and Rates for Edelweiss Securities said: “The effective fiscal outgo led by the new measures announced appears to be around 0.2 to 0.3 per cent of GDP.”

“This is not a significant amount and will help marginally in stimulating demand. It needs to be seen if the policy makers have more in the offing. Overall, there is still need for more policy support for effective demand stimulus.”

Consequently, the measures announced prior to the festive season might not have much impact on ramping up sales during the peak off-take period in India .

“This will be a muted season. The economy will continue to contract, though less than what was seen in the first quarter,” said M. Govinda Rao, Chief Economic Advisor, Brickwork Ratings.

“The amount is far too small to make it significant. In fact, conditions themselves ineffective because funds are fungible. The major deterrent is the uncertain environment in which many people would like to build reserves by saving.”

(Rohit Vaid can be contacted at [email protected])

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2nd wave: Fears of slower global recovery, US polls to weaken rupee

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Wall Stree USA

New Delhi, Oct 31 : Fears of a slower global recovery due to rising cases of Covid-19 infections in Europe and the US will cast pressure on the Indian rupee next week.

Additionally, the rupee is expected to get weaker on account of uncertainties prevailing on the back of upcoming US Presidential Election which will be held on November 3.

“The continuation of the pandemic in absence of a vaccine is creating havoc and is playing out in the Fx market. The fear that economic conditions are going to get worse before they get better, is keeping the dollar strong against EM currencies,” said Rahul Gupta, Head of Research-Currency at Emkay Global Financial Services.

“Adding to this mood is the uncertainty of the US presidential election outcome. So, next week the chances of USDINR trading above 74 are higher and expect the spot pair to trade within 73.50-74.50.”

The Indian rupee closed last week at 74.11, its weakest level in two months.

“Next week, US elections will take centrestage. Democratic candidate, Joe Biden is projected to win the race comfortably based on the current polls and leads. Also based on the current polls there is a likelihood the democrats could win both the House and Senate. This will be huge blue sweep for the and that will drive policy changes,” said Devarsh Vakil — Deputy Head of Retail Research at HDFC Securities.

“Their stated economic positions suggest that dollar could weaken in the medium term, which could drive commodities and emerging market equities higher.”

Besides, major economic data points such as automobile sales figures for October and ‘Purchasing Manager Index’ will further guide the currency’s movement.

The foreign fund inflows into the country’s equity markets are greatly influenced by these macro data that show the health of the economy.

Consequently, the flow status of foreign funds also impacts the rupee’s movement.

According to Sajal Gupta, Head, Forex and Rates, Edelweiss Securities: “Just before US elections rupee and equity became wobbly and some people may have booked profits before the event. Rupee has weakend to 74.50 levels. It has traded comfortably above the 74 handle.”

“Expect the rupee to be volatile and trade in wider range of 74 to 75.20 with some more depreciation risk.”

(Rohit Vaid can be contacted at [email protected])

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Lalu’s son Tejashwi trying to secure his own place under the sun

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Tejashwi Yadav

Patna, Oct 31 : As the Bihar Assembly elections are underway amid hectic electioneering, one political leader who is toiling to secure his own place under the sun – away from the political shadow of his father – is Rashtriya Janata Dal’s Tejashwi Yadav.

In the absence of his father and party supremo Lalu Prasad — whose oratory and inimitable style have catapulted RJD quite a few times to power in the past – Tejashwi is spearheading the poll campaign on behalf of his party and the Grand Alliance, of which the RJD, Congress and certain Left parties are a part.

By removing the pictures of his parents – former Chief Ministers Lalu Prasad and Rabri Devi – from the banners and posters of the RJD early on during campaigning, Tejashwi had give enough indications that he would go among the voters with a new image of a young leadership.

While his father forged a Muslim-Yadav alliance to come to power in Bihar, Tejashwi is talking of going down the developmental path by taking along all sections of society.

While the opposition NDA is bringing up the alleged ‘jungle raj’ during the RJD rule in Bihar in the past, Tejashwi has been avoiding to join issues with them and instead talking of jobs, irrigation and education to woo the voters.

Even as Lalu Prasad, who is presently admitted in the Rajendra Institute of Medical Sciences in Ranchi, where he has been lodged since May 2018 after conviction in fodder scams starting 2017, may be giving political instructions to Tejashwi and other RJD leaders in the run-up to the electoral battle, Tejashwi has been adding his own elements to the RJD campaign strategy.

Given the huge crowds that are seen at the rallies of Tejashwi, it seems that his poll strategies are a success so far, remarked a party leader.

Even though Tejashwi, who was Leader of the Opposition in the outgoing Assembly, may not have his father’s ability to take lighthearted potshots at his political adversaries, which has swayed the voters in the past, he has been delivering his speeches in Bhojpuri for the voter connect.

“Tejashwi may not have Lalu’s oratorial skills or style, but he has got his fingers on the pulse of the voters as to what they want. He also understands what to speak so as to make the youths at his rallies to clap. The promises of jobs and to take all along have been paying him dividends,” said an RJD leader on the condition of anonymity.

Political analyst Faizan Ahmed pointed out that by seeking forgiveness from the people for all the wrongs done in the past RJD rule, Tejashwi has given indication that he wants to make a fresh beginning in Bihar politics.

“There is no doubt that he wants to move away from his father’s shadow and prepare his own ground. In this, he is succeeding and making a connect with the electorate.”

Senior journalist Manikant Thakur said that though Tejashwi’s attempt to move away from the past RJD rule is commendable, slip of his tongue once in a while has created fear among the voters.

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Who is Preetika Chauhan? Everything to know about ‘Savdhaan India’ actress arrested by NCB

Saavdhan India’ actress Preetika Chauhan (30) was among one of the people who got arrested after getting caught buying drugs. Here’s everything about her!

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preetika chauhan

The Narcotics Control Bureau made two more arrests in the drug supply case on Sunday. ‘Saavdhan India’ actress Preetika Chauhan (30) was among one of the people who got arrested after getting caught for buying drugs red-handed.

Who is Preetika Chauhan?

Preetika Chauhan hails from Karsog, Himachal Pradesh. She is a B.Tech graduate and had made her acting debut with the film Jhamela, which was released in 2016.

She went on to play goddess Shachi in Sankat Mochan Mahabali Hanumaan.

Apart from Sankatmochan Mahabali Hanuman, Preetika Chauhan also had appeared in a few episodes of CID and Savdhaan India. She was also seen as Bhudevi in Star Bharat show Jag Janni Maa Vaishno Devi.

Preetika was last seen as Goddess Parvati in Santoshi Maa – Sunayein Vrat Kathayein. Preetika was also part of the TV show ‘Devon Ke Dev Mahadev’.

The case is in the ongoing investigation in actor Sushant Singh Rajput’s death case. The Bollywood drugs nexus case came to light while a parallel investigation was being carried out by the NCB.

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