Fiscal package to be around Rs 10.71 lakh crore

Working backwards from the Rs 20 lakh crore economic package indicated on Tuesday, economists estimate that it could be around 10.71 lakh crore.

After sounding out several economists, policy mavens and financial experts, the surmise is that the working of the Rs 10 lakh crore will play out on these lines. When one adds the earlier stimulus of Rs 10 lakh, then the matrix may look like this.

This would taken into consideration the fiscal stimulus package number 1, the RBi package and the various tax sops announced in the Union Budget.

As per one working calculation by economists, the nominal GDP is Rs 200 lakh crore. The Covid fiscal stimulus part 1 was Rs 1.70 lakh crore.

The projected fiscal stimulus part 2 is likely to be Rs 10.71 lakh crore, taking the total package to Rs 12.41 lakh crore, which would be 6.21 per cent of the GDP.

Now coming to the old fiscal stimulus of FY 21 which includes a corporate tax cut of Rs 1.45 lakh crore. A dividend distribution tax (DDT) tax cut of Rs 25000 crore, personal tax cut of Rs 40,000 crore, taking the total tax cut stimulus to Rs 2.10 lakh crore or 1.05 per cent of GDP.

The RBI had also announced a monetary stimulus which needs to be factored in. One package on March 27 was worth Rs 3.74 lakh crore while the one announced in February was Rs 2.80 lakh crore. The total RBI package becomes Rs 6.54 lakh crore which is 3.27 per cent of GDP.

Combining all this makes the total of fiscal and monetary stimulus at Rs 20 lakh crore which is 10 per cent of GDP.

This package will make the actual fiscal deficit projected at 10.67 per cent and the actual nominal fiscal deficit of the central government including off balance sheet items at 21.33 per cent.

( With inputs from IANS )