Business Live: FM’s 2-day stimulus measures to cause ‘actual fiscal impact’ of mere Rs 66,500 crore, says Barclays

Join us as we follow the top business news through the day.

10:05 AM

Sensex drops over 200 points in early trade; Nifty tests 9,100 level

The Indian benchmark stock indices have opened weak this morning despite the overnight rally in US stocks.

PTI reports: “Equity benchmark Sensex dropped over 200 points in opening session on Friday tracking losses in index heavyweights HDFC Bank, ICICI Bank and Reliance Industries amid weak domestic investor sentiment.

According to market experts, investors fear that Finance Minister Nirmala Sitharaman’s recent announcements on the Rs 20-lakh-crore economic package may not boost demand immediately, and hence economic revival would not take place any time soon.

After touching a low of 30,909.36, the 30-share index was trading 127.19 points or 0.41 per cent lower at 30,995.70.

Similarly, NSE Nifty slipped 34.45 points, or 0.38 per cent, to 9,108.30.

M&M was the top laggard in the Sensex pack, cracking over 3 per cent, followed by Maruti, HCL Tech, Hero MotoCorp, Axis Bank, ICICI Bank, ITC and HDFC Bank.

On the other hand, ONGC, Tata Steel, Bharti Airtel, Titan and HDFC were trading with gains.

In the previous session, the BSE barometer settled 885.72 points or 2.77 per cent lower at 31,122.89, while the broader Nifty tanked 240.80 points, or 2.57 per cent, to close at 9,142.75.

Foreign portfolio investors offloaded equities worth Rs 2,152.52 crore in the capital market on Thursday, provisional exchange data showed.”

9:45 AM

FM’s 2-day stimulus measures to cause ‘actual fiscal impact’ of mere Rs 66,500 crore

Given that most of the Centre’s stimulus involves fresh loans offered through banks, the actual fiscal cost may be very little.

PTI reports: “The actual hit to government finances from the measures announced by Finance Minister Nirmala Sitharaman in the last two days was pegged at Rs 66,500 crore or 0.34 per cent of the GDP by a British brokerage on Thursday.

Aggregating all the measures, which also include aspects like credit guarantees, Barclays said the government and the Reserve Bank of India (RBI) cumulatively have so far announced measures of over Rs 15 lakh crore, leaving Rs 4.25 lakh crore worth of announcements remaining to hit the Rs 20 lakh crore mark announced by Prime Minister Narendra Modi.

From an “actual fiscal impact” perspective, the moves announced on Thursday focussing on migrants, urban poor and farmers will cost only Rs 11,000 crore, the brokerage said, adding it has so far taken a hit of Rs 66,500 crore only.

“The actual fiscal impact of today’s steps will only be Rs 11,000 crore, which brings the total cost of additional incentives announced to Rs 66,500 crore (0.34 per cent of GDP), accounting for steps taken yesterday as well,” it said.

“This leaves the government with room for another Rs 1.24 lakh crore of incremental spending, on our estimates. We continue to believe the government may end up with a fiscal deficit of close to 6 per cent GDP during FY21,” its analysts said.

It can be noted that some analysts, including house economists at SBI, have been pegging the fiscal deficit to come in at a higher level of over 7.9 per cent as against the budget target of 3.5 per cent due to the massive spending that the government is undertaking.

From a monetary support perspective, the government and the RBI have made announcements of over Rs 15.75 lakh crore, leaving Rs 4.25 lakh crore more of announcements to be done to achieve the PM’s target, it said.”

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *