India’s stock market gets the stimulus package it was craving for ⁠— but it still has to wait for the details

• PM Modi today announced a stimulus package of ₹20 lakh crore to revive the Indian economy.
  
• The package will include something for everyone and it has been designed keeping different aspects like land, labour, liquidity and laws.
  
• “CII recommends the government to announce an immediate stimulus package of ₹15 lakh crore, which translates into 7.5% of GDP,” President, Confederation of Indian Industry (CII) had said on May 9.
  

As expected, the Indian government today announced a stimulus package to bring the Indian economy back on track. And it could be exactly what India’s markets were craving for.

During his fourth appearance on the TV during the coronavirus crisis, PM Modi announced a stimulus package of ₹20 lakh crore. “₹20 lakh crore in 2020, will give a new direction to a self -reliant India. This is for the growth journey of the nation,” said Modi.

And, for some, this may be better than expected. “CII recommends the government to announce an immediate stimulus package of ₹15 lakh crore, which translates into 7.5% of GDP,” Vikram Kirloskar, President of the Confederation of Indian Industry (CII) said on May 9.

However, it is not clear where the money will come from. On May 8, the government increased its annual market borrowing target by about 1.5 times to ₹12 lakh crore citing the economic damage caused by the spread of the COVID-19 novel coronavirus.


The details of the stimulus package will only be revealed tomorrow by Finance Minister Nirmala Sitharaman. Modi said the package has been designed keeping in mind all factors – land, labour, liquidity and Laws, and promised to encourage local manufacturing and local brands.

The BSE Sensex fell by 24% since the beginning of 2020, falling from 41,253 on December 31, 2019 to 31,371 as on May 12, 2020. It witnessed its biggest weekly fall since the 2008 financial crisis, after plunging by 3,900 points in a single day.

According to data obtained from the bourses, foreign investors withdrew ₹15,403 crore in April, highlighting the widespread fear in the markets due to the fast spreading Covid-19 pandemic.

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