With the world's worst outbreak of COVID pandemic stalling a nascent economic recovery, the government has begun assessing the impact of the second wave of COVID-19 infections on different sectors and may look at providing support at an appropriate time to segments requiring fiscal help. Some of the economic indicators, including the Goods and Services Tax (GST) collections, still provide confidence and incoming data will throw some more light on the state of the economy.
Services sectors like hospitality, tourism and aviation which had just started recovering were hit hard by the second wave of COVID, and these segments might need some support on an urgent basis from the government. Besides, MSME sector, the second highest employer after agriculture, has been impacted very much and would require financial assistance. The government might tweak the existing Emergency Credit Line Guarantee Scheme to provide immediate help to the sector.
Currently, around 6.5 crore Micro, Small and Medium Enterprises (MSMEs) contribute 30 per cent of the GDP. Recently, the RBI also announced a loan restructuring scheme for small borrowers amid the pandemic. However, fiscal stimulus would be effective only once local lockdowns ease and restrictions on business due to curfews are lifted.