Economic relief: Government likely to take calibrated steps

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Slowdown talk is gathering momentum by the day and the Narendra Modi government is fighting hard to calm down frayed nerves. However, with the first quarter GDP expected to come in close to 5.5 percent, the government is walking a tight rope.

CNBC-TV18 has learnt that the government is looking at providing relief but in a calibrated manner and for certain specific sectors only.

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The buzz in the corridors of North Block is that the government cannot be held responsible for socialising losses while the private sector guns for profits.

So while the government acknowledges the fact relief is needed in certain sectors, one should expect a big bang fiscal stimulus.

The government is mindful of the fact that borrowing costs should not escalate. Currently the 35 bps move on bond yields seems to have negated the recent repo rate cut by the Monetary Policy Committee.

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CNBC-TV18 has also learnt that for the auto sector, scrappage policy is a likely option as GST rate cut has not yet been formally discussed by the GST council.

The government is also hopeful that some recommendations of the Direct Tax Code could be taken up within this year and if implemented could have an initial impact of 60-70 bps on the GDP.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow