Covid-19 Stimulus package features an additional fiscal infusion of Rs. 11.4 lac crore (5.2% of GDP). The quantum is in addition to the budget estimated fiscal deficit of Rs. 7.96 lac crore and includes Government of India’s estimated revenue loss of Rs. 2.6 lac crore. The latter is funded via the additional borrowings of Rs. 4.2 lac crore, with the remaining Rs. 1.6 lac crore available for the actual stimulus package. The estimated Rs. 0.5 lac crore loss by way of lower than estimated nominal GDP growth is also included in the additional borrowings as per the renewed GOI borrowing calendar. We note that roughly 2% of GDP worth fiscal deficit has been transferred to states, which have been allowed to raise the equivalent quantum of Rs. 4.26 lac crore in addition to their planned quota.

When considering the entire package as part of the fiscal calculations, Central Government’s fiscal deficit will reach 5.9%, excluding state’s share of additional fiscal debt and 7.9%, while including the latter. In terms of quantum, the fiscal deficit will be worth an estimated Rs. 16.78 lac crore, including the budgeted fiscal deficit and Rs. 19.38 lac crore with revenue loss compensation of Rs. 2.6 lac crore.

Breaking down the Rs. 11.4 lac crore, apart from the Rs. 1.6 lac crore available for stimulus (part of Rs. 4.2 lac crore additional borrowings), we believe that the Central Government will be spending an additional Rs. 2.96 lac crore under various schemes announced. This quantum is to be divided among various fiscal heads such as Kisan Sampada Fund (Rs. 0.99 lac crore), MGNREGA (Rs. 0.4 lac crore), PM Kisan Scheme (Rs. 0.3 lac crore), and Interest Subvention & Contribution for Guarantee Fund (Rs. 0.29 lac crore) along with Strengthening of Power Systems schemes.

As per our previous calculations based on a daily economic loss methodology, we estimate that for the first 60 days of the lockdown, GOI revenue will be roughly 48% of actuals (budget estimates). Considering that there will be considerable opening up of the economy, June 1 onwards, the revenue loss is estimated to be Rs. 2.6 lac crore. This number may however rise if the lockdown is extended even after May 31^st, consequently impacting these calculations and leading to additional borrowings going forward.

A. Includes the post-harvest fund worth Rs. 30,000 crore via NABARD

B. Creation of agro-processing clusters (Gate to Retail) and related infrastructure development fund

C. Includes EPFO compensation fund, Mudra Shishu loan interest subvention fund and the mother-daughter equity infusion fund for MSMEs under stress (50% utilization per annum)

D. Assuming center’s share at 50% in Discom equity infusion

E. Includes tax foregone by way of TDS/TCS tax reduction

Although the Government of India has made it clear that no additional borrowings may occur this financial year apart from the already notified additional borrowings, there is confusion regarding the source of the additional expenditure by way of schemes announced.