Govt Likely To Roll Out Another Stimulus Package Once Unlock Phase Begins: Brokerage Firm Bernstein

Brokerage firm Bernstein has predicted that the central government could roll out a stimulus package for small businesses and the self-employed individuals during the beginning of the next unlock phase.

It noted that the macro index hints towards a deterioration in economic activity during April-May this year, which has been led by a surge of Covid-19 cases across the country that resulted in several statewide restrictions and lockdowns as well.

Energy consumption along with e-waybills have moderated and fallen down in India respectively in May, with the latter being led by a shutdown in retail outlets.

However, a 21 per cent growth has been observed in acreage amidst the summer crop sowing season and this is expected to limit risks on the inflationary front and also lend support to the rural economy.

“We believe that irrespective of the ability to spend, there will be another stimulus announced by the government when the unlock phase commences,” Bernstein mentioned, as reported by The Times of India.

It added, “We believe that the most impacted part of the economy remains the unorganised end markets (SMEs/Self-employed). While the impact on the lower middle class remains, this time we have argued that consumer sentiment in the upper-middle class could be weak and this aspect needs to be addressed.”

The brokerage also mentioned that improving consumer sentiment along with introducing stimulus in the forms of loans and guarantees should be one of the key focus areas in order to uplift the economy.