Stimulus 2.0 has minimal firepower to support growth, says Moody's

The government expects the new stimulus to add around 0.5 per cent of GDP - a small boost compared with the 11.5 per cent drop in real GDP for year ending March 2021

India’s second round of stimulus package will provide limited support to growth and highlights budgetary constraint to back the economy during a very sharp contraction, rating agency Moody’s said on Thursday.

On October 12, Finance Minister Nirmala Sitharaman unveiled its second round of fiscal stimulus, amounting to Rs 46,700 crore ($6.4 billion), which is about 0.2 per cent the gross domestic product (GDP) for year ending March 2021. The new stimulus, which includes cash payments to government employees and interest-free loans to states, aims to boost consumer spending during India’s festive season and to increase capital expenditures.

The measures will involve additional