The new economic package is insufficient to accelerate growth

MUMBAI: An additional સ્ 4 billion guarantee scheme announced by Finance Minister Nirmala Sitaram to provide relief to small and medium enterprises and the tourism sector affected by the Corona epidemic is not enough to boost the country's economic growth, analysts said.

There is a perception that the new package will provide temporary relief and is not enough to accelerate economic growth. As per the announcement made yesterday, a loan guarantee of Rs 1.10 trillion will be provided to health, tourism and small business houses.

The government has increased the previous loan guarantee scheme from Rs 4 trillion to Rs 2.50 trillion.

In developed countries where relief packages are being provided to individuals, the government in India is investing more in the infrastructure sector and providing guarantees on bank loans. Most of the relief is in the form of loan guarantees and not direct financial relief, said one analyst.

Every stimulus so far is lower than required. The new measures will put a burden of Rs 0.50 trillion on the government. The success of this new package will depend on how the lending stays, said another analyst.

In order to increase demand, in addition to reducing taxes on petrol and diesel, more cash must be provided to the poor. Consumer confidence will have to be boosted so that demand can increase, he added.

To give a boost to the tourism industry, the standard of providing five lakh free tourist visas should be extended to 203-2, said tourism circles. The industry also expects to be exempted from mandatory obligations.