Show me the money! Analysts say illusory stimulus leaves economy, stocks in big trouble

NEW DELHI: The hype around the Rs 20,00,000 crore government stimulus fizzled out and stocks are falling like a deck of cards on Dalal Street. Analysts are trying to figure out whether the big package had any cash stimulus at all for the coronavirus-hit economy, which now stares at a worst recession ever. “This is not a stimulus package. A stimulus package is something that would increase GDP,” says Swaminathan Aiyar, Consulting Editor at ETNow. He said the actual fiscal stimulus announced by the government so far was perhaps not more than 1 per cent of GDP. “The government is afraid of a downgrade by foreign rating agencies,” Aiyar said. “We are facing an economic collapse. So please call it whatever you may like, but do not call it a stimulus. You might at best call it a sedation. You might say that when the patient is crashing, I am trying to ease the pain a little. That is what we have achieved. But aggregate demand is collapsing at a time when supply itself is collapsing, because the lockdowns have interrupted all kinds of production chains. The outlook remains very grim,” said Swaminathan Aiyar. Goldman Sachs early Monday warned that… Read full this story

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