Economy May Need Further Direct Fiscal Stimulus

A further direct fiscal stimulus the size of 3-5% of GDP might be required to offset gap between the equivalent fiscal stimulus hours and the loss in labour hours, noted State Bank Of India's latest update of Ecowrap. The estimates have averaged out the different working conditions and are solely based on the employment figures. However, they are in line with the estimates for lower middle income countries, as dividing the calculated hours lost and equivalent fiscal stimulus by the total number of hours worked in Jan-Sep'2020 gives 15.8% and 5.9% respectively. Thus a gap of around 10% exists for India vis-vis a gap of 11.6% in the lower-middle income group.

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