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Showing posts from May 18, 2020

FM's economic vaccine: Final tranche is high on reforms, low on stimulus

The government on Sunday provided little immediate relief except increasing allocation to its flagship rural job scheme by 66 per cent, but used the pandemic to usher in bold public sector reforms in its last leg of its announcements on the Rs 20-trillion package. State-owned units will remain only in strategic areas, which, however, are yet to be defined, while those in other areas will be privatised, according to public sector enterprise policy, which the government will detail later. Union Finance Minister (FM) Nirmala Sitharaman also gave leeway to states in terms of market borrowing, but much of it is conditional on reforms, such as the one-nation-one-ration card. This, if fully tapped, will release Rs 4.28 trillion for states, but will widen the fiscal deficit to 5 per cent of state gross domestic product for each. This, together with the Centre’s additional borrowing of Rs 4.20 trillion, will take the combined fiscal deficit of the country to well over 10 per cent of gross domes…