Centre Working on a New Stimulus Package to Combat Second Wave of Coronavirus: Report

In order to deal with the second wave of coronavirus and localised lockdowns, the Centre is likely to announce a stimulus package.

According to an exclusive report by Hindustan Times, the package could provide relief to the poor if the second wave of the pandemic disrupts their livelihood.

In order to combat the first wave, Finance Minister Nirmala Sitharaman had last year announced a Rs 20 lakh crore package in five tranches, which included Rs 3.70 lakh crore support for MSMEs, Rs 75,000 crore for NBFCs and Rs 90,000 crore for power distribution companies, free foodgrains to migrant workers, increased allocation for MGNREGS, tax relief to certain sections and Rs 15,000 crore allocated to the healthcare sector.

The Indian economy grew at its slowest pace in 11 years at 4.2 per cent in 2019-20. The Covid-19 outbreak and subsequent lockdowns had severely disrupted economic activities.

With the second wave of coronavirus spreading rampantly across the country, the economy, especially banks, is again staring at a year of defaults, NPAs and bad books. Moreover, the RBI is yet to announce a moratorium for this year.

Bankers fear lockdown-like curbs, including curfews, travel restrictions and mall shutdowns, are likely to hurt borrowers, triggering a second wave of defaults.

Rating agency Fitch, last week said, more than 80 per cent of new infections are in six prominent states that account for roughly 45% of banking sector loans. The operating environment for banks, Fitch said, will most likely remain challenging and the second wave could dent the sluggish recovery in consumer and corporate confidence, and further suppress banks’ prospects for new business.

According to a report by Mint, lockdowns in Maharashtra are likely to hit banks as nearly a quarter of all bank loans have been made to individuals and businesses in the state. As of March 31 2020, Maharashtra accounted for 24 per cent of loans from commercial banks.

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