Fitch Ratings, in its latest note, assessed the impact of India’s massive $ 266 billion stimulus package against the coronavirus crisis.
“About half of the package amount covers the fiscal measures that had been previously announced and also includes the estimated economic impact of the Reserve Bank of India (RBI) monetary stimulus measures.”
“An apparent reluctance to budget expansion from the central government in the midst of the Covid-19 crisis in India also poses a significant downside risk for its 1.”
“The economic crisis in India is worsening further due to the spike in Covid-19 infections and weak domestic and external demand. We believe that every delay in the effective revival of the government will only worsen the slowdown, which will eventually require more spending to get the economy out of the country.
The new fiscal stimulus package announced between May 13 and 17 is “made up of government loan guarantees, credit extensions to be led by banks, and regulatory changes”.
“We consider that the package does not respond to the immediate concerns of the economy and have revised our central and combined deficit forecasts for the 2020/21 fiscal year (April-March) to 7% and 11% of GDP, respectively 6.2% and 9%. Previously, “