$277bn package may not give boost to India

Bloomberg

India’s 21 trillion rupee ($277 billion) virus-relief package fell short of economists’ expectations, providing fiscal measures that will help improve growth over the years without delivering an immediate boost to an economy that desperately needs it.
Analysts have been pouring over the details provided by Finance Minister Nirmala Sitharaman over the past five days, and the conclusion of many is that the additional spending boost is far less than the 10% of gross domestic product that the headline number suggests. HSBC Holdings Plc estimates a fiscal cost of just 1% of gross domestic product.
The rupee fell the most in Asia on Monday, tracking stocks as investors discounted the rescue plan. The currency declined as much as 0.5% to 75.97 per US dollar in a third day of declines.
Some of the key measures outlined by Sitharaman include: loan guarantees for small businesses, cheap credit to workers and farmers, tax breaks for service providers, increased foreign direct investment in defense manufacturing and a suspension of new insolvency proceedings for up to a year.

Much of the economic package includes measures already budgeted by the government and the central bank.
“Only about 10% of this stimulus can be traced as direct additional budgetary cost to the central exchequer,” said D.K. Srivastava, chief policy adviser at EY India. “Nearly 5% of the stimulus relates to already budgeted expenditures.”
Rahul Bajoria, an economist at Barclays Plc in Mumbai, said the measures include 8 trillion rupees of support already announced by the Reserve Bank of India. He estimates the actual fiscal impact on the budget will be only 1.5 trillion rupees, or 0.75% of GDP.