Among the major G20 nations, India’s revenue and expenditure measures are at the lowest level.
Even after the Modi government announced a special economic package worth Rs 21 lakh crore, India’s fiscal response to the coronavirus pandemic is weakest among major economies, a research report said. Various nations, including India, Germany, Italy, the UK, Japan, the US, Australia, Spain, Korea, Canada, Brazil, and China, have rolled out fiscal measures to support their economies in the wake of the coronavirus crisis. These measures were either in the form of revenue and expenditure or loan guarantees, loans, and equity injections. However, among the above nations, India’s revenue and expenditure measures are at the lowest level, according to the research report by Deutsche Bank.
While the US and Australia have pledged to spend more than 10 per cent of their GDP to fight the coronavirus-led crisis, India has aimed to spend nearly 1 per cent of GDP as revenue and expenditure measures. Announcing the Atma Nirbhar Bharat package with major economic reforms to make India a self-reliant economy, PM Modi had said that the government stimulus would be valued at nearly 10 percent of the country’s GDP; however, a major portion in the package consisted of loans and their guarantees.
India is witnessing a steep rise in the number of coronavirus cases, which is posing a further threat to the economy. Given the economic situation in the country, Moody’s has already downgraded India’s sovereign rating to Baa3 and has further threatened to bring it down to junk status. Also, due to the prevalent poor infrastructure and low social sector spendings, the IMD world competitiveness index has placed India at 43rd position in the list of 63 nations.
Meanwhile, the Deutsche Bank report added that global consumer spending is lower despite the permission to travel as fewer people are travelling and going out due to the unavailability of coronavirus vaccine. While India has stepped up efforts to find a vaccine for the coronavirus, the number of the pre-clinical trials of the coronavirus vaccine is less than five major economies — US, China, Canada, UK, and Russia.