Similarly, the MSME package devised by MSME Minister Nitin Gadkari, for instance, involves the government to insure a revolving fund of Rs 1 lakh crore put together by banks and financial institutions. “The government just provides guarantee to the fund… its a kind of insurance, which does not entail huge outgo from the Budget,” said the source. While the Rs 1 lakh crore helps the government in showing a big economic package, the actual cost to the exchequer will probably be a couple of thousand crores of rupees.
Further, the government can also recapitalise banks, helping their capital adequacy. “Again, we just have to account for the interest to be paid on the recapitalisation bonds, which also does not amount to any substantial outgo,” said a government official, who did not wish to be quoted.
The government, officials explained, cannot really afford a huge stimulus. “It is intended to provide relief and get the patient out of the ICU… There is no fiscal space to increase expenditure substantially,” the official said.
https://www.thehindubusinessline.com/portfolio/news-analysis/why-the-20-lakh-crore-stimulus-adds-up-to-just-2-lakh-crore-direct-impact/article31620474.ece
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Similarly, the MSME package devised by MSME Minister Nitin Gadkari, for instance, involves the government to insure a revolving fund of Rs 1 lakh crore put together by banks and financial institutions. “The government just provides guarantee to the fund… its a kind of insurance, which does not entail huge outgo from the Budget,” said the source. While the Rs 1 lakh crore helps the government in showing a big economic package, the actual cost to the exchequer will probably be a couple of thousand crores of rupees. Further, the government can also recapitalise banks, helping their capital adequacy. “Again, we just have to account for the interest to be paid on the recapitalisation bonds, which also does not amount to any substantial outgo,” said a government official, who did not wish to be quoted. The government, officials explained, cannot really afford a huge stimulus. “It is intended to provide relief and get the patient out of the ICU… There is no fiscal space to increase expenditure substantially,” the official said. https://www.thehindubusinessline.com/portfolio/news-analysis/why-the-20-lakh-crore-stimulus-adds-up-to-just-2-lakh-crore-direct-impact/article31620474.ece
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