Stimulus 2.0: Govt measures too little too late; may not move the needle

Minor tinkering and a reluctant increase in expenditure are unlikely to generate demand at a meaningful scale

The progressive opening up of the economy is improving economic activity and some of the high-frequency indicators have raised hopes of revival. The data released on Monday showed industrial production contracted by 8 per cent in August, which was better than the 10.4 per cent in July and the 15.7 per cent in June. There is a near consensus now that the government should support demand at this stage to make the recovery more durable. In that context, the government’s announcements on Monday to revive consumer demand and investment activity are too little, too late to make any meaningful impact.