NEW DELHI: Industry body CII on Thursday said that there was scope to offer a Rs 3-lakh-crore stimulus, including cash transfer to households, to spur demand and boost economic activity which, it said, has taken a beating due to the second wave. At the same time, it also suggested that the RBI could expand its balance sheet to ensure that a bigger spend does not push up interest cost.
Citing a survey conducted by it, the lobby group said that 51% of the respondents expected an adverse impact on production and sales during the first quarter as company employees had been infected apart from raising medical costs, resulting in a squeeze on income. It assessed the overall GDP growth at 9.5% during the current financial year due to a strong recovery in the second half.
Assuming three different fiscal scenarios with fiscal deficit of 7-8% of GDP, CII suggested that there was scope to provide further stimulus of around 1.3% of GDP. “Fiscal stimulus of Rs 3 lakh crore is required,” said new CII president T V Narendran, who is also Tata Steel MD. He recommended a significant ramping up of vaccination to at least 71.2 lakh shots average daily — more than twice current level.